India TV | Indian, Russian oil giants strike deal to boost oil supply despite Western pressure

Mar 29,2023

Sanctions hit Russia signed an agreement with an Indian oil giant intending to boost the crude oil supply. According to the Russian news agency, TASS, Moscow's top oil company Rosneft signed a deal with the Indian Oil Company to increase the supply of petroleum to New Delhi. 

Citing the statement released by Rosneft, the Russian media reported that the deal was signed during the working trip of Rosneft CEO Igor Sechin to India. According to the statement, he met with representatives of state departments of India, as well as with the heads of a number of the country's largest oil and gas companies.

Russia and India may use national currencies for trade 
"During the trip, Rosneft Oil Company and Indian Oil Company signed a term agreement to substantially increase oil supplies as well as diversify the grades to India. Igor Sechin, CEO of Rosneft Oil Company, and Shrikant Madhav Vaidya, Chairman of Indian Oil Corporation Ltd., signed the agreement, in the presence of India's Minister of Petroleum and Natural Gas Hardeep S. Puri," the company said.

Besides, it reported that both nations discussed ways of expanding cooperation between Rosneft Oil Company and Indian companies in the entire value chain of the energy sector. Also, both countries also discussed the possibility of making payments in national currencies.

Russia's oil export soars nearly 22-fold 
Interestingly, the statement came a day after the Russian Deputy Prime Minister said that the maximum energy was diverted to "friendly nations" after the United States and the European Union imposed back-to-back sanctions on Russian energy. 

He claimed that Russian oil export to New Delhi soared 22-fold in the past year. "Most of our energy resources were diverted to friendly countries," several state news agencies quoted Alexander Novak as saying. "For example, Russian oil sales to India surged at least 22 times," he added. 

Further, Novak asserted that the country cut crude production by 500,000 barrels per day this month and added the trend to be followed till June this year. However, he claimed that this did not impact the overall business of the country. 

India imports 85% of its crude oil needs
It is worth noting that India is the world’s third-largest oil-consuming and importing nation. It imports 85 per cent of its crude oil needs. Crude oil is converted into fuels like petrol and diesel at refineries. However, ever since the war between Russia and its neighbouring nation started last year, the West and Europe imposed stringent sanctions on its energy. This resulted in Russia's offering more discounts to its oldest ally, India.

Earlier, India defended India's stand
The Indian government has been vehemently defending its trade with Russia, saying it has to source oil from where it is the cheapest. The government has previously indicated that oil companies will continue to buy oil from Russia outside the price cap.

External Affairs Minister S Jaishankar on December 7 told the Rajya Sabha that Indian refiners will continue to look for the best deals in the interest of the country. “We do not ask our companies to buy Russian oil. We ask our companies to buy oil (based on) what is the best option that they can get. Now, it depends on what the market throws up,” he had said while replying to clarifications sought by MPs on his suo moto statement on foreign policy.

Besides, on several international forums, New Delhi has defended its oil purchase from Moscow despite being brutally trolled by the EU and the West. Therefore, it is unlikely that the latest measure would affect India's oil market.