Rosneft, Reliance in largest ever India-Russia oil supply deal: report

Russia’s state-run energy firm Rosneft has agreed to supply about 500,000 barrels per day of crude to billionaire Mukesh Ambani’s Reliance Industries Ltd for a period of 10 years in the biggest energy deal between both countries, Reuters reported, citing three people familiar with the deal.

The agreement, valued at about $13 billion annually and amounting to 0.5% of global supply, is expected to further cement energy relations between India and Russia, which is under Western sanctions over its invasion of Ukraine.

Under the agreement, Rosneft will supply 20-21 Aframax-sized (80,000 to 100,000 metric tons) cargoes of various crude grades and three cargoes of fuel oil each month, the report said.

The shipments will be delivered to Reliance’s Jamnagar refinery in Gujarat.

The deal comes ahead of Russian President Vladimir Putin’s planned visit to India early next year–his first to India since the Russia-Ukraine war.

India is the leading buyer of seaborne Russian crude, benefiting from discounted prices of $3-$4 per barrel compared to other grades.

Moreover, the government has reportedly called on both state-run refiners and private companies such as Reliance to obtain long-term supply contracts with Russia, aiming to lock in discounts for a third of the contracted oil in a bid to protect India’s economy from price volatility.

Reliance and Rosneft will reportedly review the pricing and quantity of oil every year to adjust for changes in the oil market.

Earlier this year, Reliance had a separate agreement with Rosneft to purchase 3 million barrels of crude oil each month. Rosneft has also been regularly selling crude oil to Reliance through intermediaries.