State-owned Indian Oil Corp (IOC) signed an agreement with Russian oil major Rosneft allowing it to buy up to 2 million tons or 40,000 barrels of crude per day (bpd) in 2020, Oil Minister Dharmendra Pradhan said Wednesday.
India has diversified its supplies of crude oil imports to hedge political risks that threaten to disrupt supplies from a region or country in particular.
“This is just the beginning,” Mr Pradhan said after meeting Igor Sechin, chairman of Rosneft, in New Delhi.
India’s top refiner will exercise its right under this first annual agreement with Rosneft to buy Urals crude whenever the price is low enough to cover freight costs, an IOC source said.
The contract gives IOC the option this year to take as much as 40,000 bpd of oil, said the source, who refused to be named because he was not allowed to speak to the media.
State refiners typically purchase Russian oil through the spot market rather than through contract. Crude imports from Russia have typically been low for the nation as freight costs tend to exceed those for supplies from the Middle East.
India is the third-biggest consumer and importer of oil in the world. It ships in over 80 per cent of its crude needs, typically depending for most of its supply on the Middle East.
Nevertheless, last year, India’s share of crude imports in the Middle East shrank to 60 per cent. This is down from 65 per cent in 2018. Its lowest since 2015. It is as record production from the US and countries like Russia offered importers alternatives to tap.
Sechin has indicated his willingness to work with Indian oil and gas companies. This is to further improve the energy security of the country, Mr Pradhan said after their meeting on Twitter.
The two sides also debated Indian investments in Russia’s Eastern Cluster projects, particularly in the Arctic, he said.
Mr Pradhan also told Rosneft about the plan of the federal government. This is to sell its stake in state refiner Bharat Petroleum Corp., two sources that sought anonymity have said.
Rosneft said that it would look at the offer without a commitment to a BPCL bid, the sources said.
Mr Pradhan had said in November that foreign energy companies would be invited. This is to take part in the privatization of state-owned oil companies.
In Houston, Prime Minister Narendra Modi met with chief executives of companies. They include Exxon Mobil Corp, BP Plc, Royal Dutch Shell, Rosneft Oil Co. Also, Saudi Aramco and Abu Dhabi National Oil Co (Adnoc).
CLICK HERE FOR MORE BUSINESS NEWS
CLICK HERE FOR BUSINESS UPDATE