Reliance Industries has signed a one year contract with Russia's Rosneft to buy at least 3 million barrels of oil a month in roubles, reported Reuters. Reliance Industries operates the world's biggest refining complex.
"India is a strategic partner for Rosneft oil company," the Russian company said in an emailed response to questions from Reuters, adding that it does not comment on confidential agreements with partners. "Cooperation with Indian companies includes projects in the field of production, oil refining and trading of oil and petroleum products."
With this deal, Rosneft will also help Reliance to secure oil at discounted rates. This comes at a time when the OPEC+ group of oil producers is expected to extend voluntary supply cuts beyond June.
Under the terms of deal, Reliance will buy two cargoes of about one million barrels of Urals crude with an option to buy four more each month at a discount of $3 a barrel to the Middle East Dubai benchmark. The refiner will also purchase one to two cargoes a month of low-sulphur crude oil, mainly ESPO Blend exported from Russia's Pacific port of Kozmino, at a premium of $1 a barrel to Dubai quotes.
Rosneft has reportedly said that commercial approaches to determining the value of sold crude are the same for all companies, regardless of whether they are private or state-controlled.
As per Bloomberg, the shift to rouble payments follows Russian President Vladimir Putin's push for Moscow and its trading partners to find alternatives to the Western financial system to facilitate trade despite U.S. and European sanctions.
The OPEC+ countries along with Russia are due to discuss the output cuts in an online meeting on June 2.
Since the sanctions imposed on Russia by the West, India has become the biggest consumer of the seaborne Russian crude. India has also paid for Russian crude in rupees, dirhams and Chinese yuan. Meanwhile, as per a Reuters report, state-owned Indian refiners, have been tapping spot markets for Russian oil because they were unable to finalise term supplies for this year
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