(Photo : RIL)
Reliance Industries has signed an unprecedented oil supply deal with Russia's state- owned oil giant Rosneft to purchase at least 500,000 barrels per day of crude oil, Reuters reported citing sources familiar with the deal.
The 10-year agreement is the largest energy deal between the two nations and comes amid the ongoing sanctions against Russia since the invasion of Ukraine. India, the third-largest oil importer in the world, has positioned itself as one of the biggest buyers of Russian oil since European and U.S. sanctions significantly reduced Russia's access to Western buyers.
As part of the deal, Rosneft will deliver 20 to 21 Aframax-sized cargoes (ranging from 80,000 to 100,000 metric tons) of various Russian crude grades, along with three fuel oil cargoes of around 100,000 tons each, every month. These shipments will be directed to Reliance's Jamnagar refinery in Gujarat, the largest refinery globally, Reuters report added.
India is not impacted by the sanctions against Russian oil and has been benefited from the reduced oil prices from Russia, which is exploring ways to circumvent Western financial systems by transacting in non-dollar and Euro currencies.
India which heavily depends on crude imports for domestic consumption and is the fastest- growing energy market, has been a leading buyer of seaborne oil from Russia. The country has been paying in rupees, Chinese-Yuan and dirhams to for Russian oil. Earlier this year reliance industries had signed a one-year contract with Rosneft to purchase at least 3 million barrels of oil monthly in roubles.
Reliance's ability to secure long-term crude oil contracts with Russia will allow the company to hedge against any price volatility caused by these cuts, providing additional stability in India's energy sector.
According to reports, Indian government had requested state-run oil refiners and Reliance Industries to negotiate long term deals with Russia, however, state-run companies are buying Russian oil from spot markets as they could not negotiate a long-term deal yet with Russia, Business Today reported.
For Russia, this deal not only strengthens its ties with India but also reinforces its shift away from Western markets, ensuring its oil revenue continues despite international sanctions.
The EU in its latest sanctions against Russia this week, had targeted the so-called "shadow fleet" of vessels transporting Russian crude to bypass the G7-imposed price cap of $60 per barrel. This fleet has been crucial in maintaining the flow of Russian oil despite international restrictions.
U.S. Treasury Secretary Janet Yellen also had recently remarked that Washington is exploring innovative strategies to further limit Russia's oil revenue, leveraging the recent weakness in global demand to tighten enforcement.
The deal cements energy ties with Russia and signifies a strategic step forward for both nations amid shifting global geopolitical dynamics.
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