The oil supply agreement between Rosneft and Indian Oil Corp, which expired in March, has not been renewed due to disagreements over price and volumes, according to a Reuters report citing sources familiar with the matter. As a result, India's leading refiner has resorted to spot markets.The annual oil deal between IOC and Rosneft signed initially during Russian President Vladimir Putin's visit to India in December 2021, was renewed for a second time a year ago, just months before Moscow's military involvement in Ukraine. According to the report, the term contract between the state-run Indian Oil Corporation (IOC) and Rosneft expired on March 31st. It further added that the agreement for 2024-25 has yet to be renewed.
IOC and Rosneft may still reach an agreement for the deal if they can come to terms, states the report. In the interim, the Indian firm plans to procure Russian oil from the spot markets.
New Delhi has been capitalising on discounted Russian oil as Western nations refrained from purchasing and imposed sanctions on Moscow following its invasion of Ukraine, with Russia emerging as the primary supplier to the world's third-largest importer. Under IOC's annual oil purchase contract with Rosneft, the agreement entailed a monthly supply of 1.5 million metric tons (equivalent to 360,000 barrels per day) at a discount ranging between $8 and $9 per barrel to Dubai quotes on a delivered basis.
IOC, along with Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL), were in the midst of negotiations with Rosneft for an annual contract starting from April 1, aiming to secure up to 400,000 barrels per day of oil, as per a previous Reuters report.
However, Rosneft's proposal fell short of expectations, offering only 4-6 cargoes per month, totalling up to 4 million barrels. This was significantly below the collective requirement of the Indian refiners, according to the report. Additionally, Rosneft's offer included a discount of $3-$3.50 per barrel compared to Dubai quotes within the term deal, similar to prevailing rates in spot markets, indicated the report.