Russia, India Agree Massive Ten Year Oil Refining Contract

Russia’s state energy giant Rosneft has agreed to supply up to 500,000 barrels a day of various crude oil grades, under a ten year contract, to Indian private refiner Reliance. Worth roughly US$13 billion a year at current prices, the energy deal is the biggest-ever between Moscow and New Delhi.

Under the decade -long agreement, Rosneft would deliver 20-21 Aframax-sized cargoes (80,000 to 100,000 metric tons) of various Russian crude grades plus three cargoes of about 100,000 tons each of fuel oil each month.

The shipments to Reliance’s giant refining complex at Jamnagar in the western state of Gujarat will start from this coming January. The two sides will review pricing and volumes every year under the deal, which has an option to be extended for a further ten years – securing Russian energy supplies to India through to 2045.

The majority of the oil will be medium-sulphur and diesel-rich Russian Urals crude to be priced at a discount of US$3 per barrel to Dubai quotes for the following year. Premiums for light sweet grades were set at around U$1.50 a barrel for ESPO, the sources said, Sokol at about US$2 per barrel and Siberian Light at about US$1 per barrel against Dubai quotes for 2025.

The new deal would subsequently account for about 50% of Rosneft’s total seaborne oil exports from Russian ports and amounts to 0.5% of global supply.

Discussing the deal, Reliance said that it works with numerous international suppliers, including from Russia, and deals are based on market conditions. This year, Reliance had a deal with Rosneft to purchase 3 million barrels of Russian crude every month. Rosneft has also been selling crude to the Reliance via intermediaries.

Denis Alipov, Moscow’s ambassador to India, said this week that Russia has become the largest oil supplier to India, accounting for up to 40% of India’s overall crude imports. Deliveries have doubled last year to values of US$45 billion.

India is the world’s fifth-largest economy and third-largest importer and consumer of oil, ramped up crude purchases after Russia rerouted supplies to Asia from Europe in response to Western sanctions over the Ukraine conflict.

The sustainable, and significant volumes of Russian energy now being supplied long-term to India will underpin a huge productivity boom in the country and will add a substantial boost to India’s industrial competitiveness on a global basis.