As Russian discounts fall, Indian refiners join hands to negotiate better terms

India’s share of crude imports from Russia was one-third of its total oil import bill in value terms in 2023-24.
India’s share of crude imports from Russia was one-third of its total oil import bill in value terms in 2023-24.


  • State-run and private refiners including IOC, Bharat Petroleum and Reliance Industries are jointly negotiating with Russian suppliers for better crude prices after discounts fell 70%
  • India saved about $7.9 billion in the first 11 months of 2023-24 due to cheaper imports from Russia

NEW DELHI : With discounts on Russian crude oil dwindling, India, in a first such effort, has brought together state-owned and private oil refiners to jointly negotiate for higher discounts and better terms with Russian suppliers, including Russia’s largest oil company Rosneft PJSC.

The government-led joint sourcing strategy involves leveraging India’s position as the world’s third-largest crude oil buyer to get better discounts on Russian oil, which have dropped to about $3 per barrel from a high of $10 earlier, said two people aware of the development.

The calibrated strategy—involving Indian Oil Corp. (IOC), Bharat Petroleum Corp. Ltd (BPCL), Hindustan Petroleum Corp. Ltd (HPCL), Reliance Industries Ltd (RIL), and HPCL Mittal Energy Ltd (HMEL)—may help save on India’s significant oil import bill, they said, requesting anonymity.

Russia, facing sanctions from western economies following its invasion of Ukraine, is currently the top supplier of crude to India, allowing India to save billions of dollars from the deep discounts on offer. Those discounts, however, have been reducing in recent months.

“The discount on Russian oil is coming down. While the Russians are tough negotiators, we have an advantage as we are speaking to them as one," one of them said. “Our point is simple: if they don’t offer more discounts to India as a market, then we can look elsewhere. A lot of oil is flowing."

Energy security is key to India’ national security as the country imports over 80% of its oil requirements. India is particularly vulnerable as any increase in global prices can affect its import bill, stoking inflation and increasing the country’s trade deficit.

Spokespersons for India’s petroleum and natural gas ministry, IOC, BPCL, HPCL, HMEL, and RIL did not reply to queries emailed Friday afternoon.

“Currently we do not have the information mentioned in your enquiry," a spokesperson for Rosneft said in an emailed response. “However, we believe that the commodity price should be formed on market principles rather than determined by individual groups or organizations."

Cartel cuts

India has been calling for a global consensus on “responsible pricing", which assumes significance as the influential OPEC+ cartel, which includes Russia, has been limiting its crude supplies. 

The Vienna-based Organization of the Petroleum Exporting Countries’ crude-oil production fell by 48,000 barrels a day to 26.575 million barrels a day in April, according to a WSJ report

OPEC and its allies have extended their output cuts until the end of June, which many analysts expect could be stretched to the second half of 2024 to boost prices, the report added.

Data from India’s ministry of commerce show the country imported crude worth $46.48 billion from Russia in 2023-24, about 50% higher from the $31.02 billion worth of crude imported from the country in FY23. India’s share of imports from Russia was one-third of its total oil import bill in value terms. 

Consequently, India’s oil import bill in FY24 shrunk 13.35% from a year earlier to $139.85 billion. India effectively saved about $7.9 billion in the first 11 months of FY24 due to cheaper imports from Russia, rating agency Icra said in a recent report.

In FY22, before the Ukraine crisis broke, Russian oil accounted for only 2% of India’s total oil imports.

Deeply invested in Russia

State-run ONGC Videsh Ltd (OVL), Bharat Petroresources Ltd, Indian Oil Corp., and Oil India Ltd (OIL) have invested $16 billion in Russia till date. 

While OVL, the overseas arm of Oil and Natural Gas Corp. Ltd (ONGC), owns a 20% stake in the Sakhalin-1 hydrocarbon block, a consortium of OVL, OIL, IOC and Bharat Petroresources owns 49.9% in Rosneft’s subsidiary CSJC Vankorneft.

“Rosneft has vast experience in implementing joint projects with Indian companies. Our cooperation covers the entire technological chain and includes projects in production, refining, sales of crude oil and petroleum products, and much more," the spokesperson for Rosneft said. 

“Rosneft values the existing partnership relations with Indian oil and gas corporations and cooperates with them on a regular basis. The company is a reliable and stable supplier of energy resources to the Indian market," the spokesperson added.

Another Indian consortium comprising OIL, IOC and Bharat Petroresources owns 29.9% of LLC Taas-Yuryakh (Taas-Yuryakh Neftegazodobycha). OVL has also acquired the Siberian deposits of the UK’s Imperial Energy Corp.

Apart from its major oil suppliers including Iraq, Russia, Saudi Arabia, the UAE, and the US, India has been seeking to diversify its oil supplies by procuring crude from countries including Gabon, Canada, Brazil, Columbia, Congo, and Brunei.

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