New Delhi: Russia has decided to offer its flagship Urals crude oil to India at a much discounted rate of $35 a barrel.
To mitigate stricter sanctions, which are causing an impact on the Russian economy, Moscow has adopted a new plan to attract buyers for its barrels elsewhere, news agency Bloomberg reported, quoting some sources.
As Western pressure mounts on Russia due to its invasion of Ukraine, the high discounts on the direct sale of oil is another way of selling crude.
Quoting the sources, the Bloomberg report said Russia wants India to take 1.5 crore barrels contracted for this year just to begin with.
More talks regarding crude oil purchase are taking place at the governmental level.
Russian Foreign Minister Sergei Lavrov is travelling to India on Thursday for a two-day visit, and the matter could be discussed then, the report said.
India, which remains the world's third-biggest oil importer and consumer, has been buying Russian oil through spot tenders since Russia invaded Ukraine on February 24.
As of now, India has purchased at least 1.3 crore barrels of Russian oil since February 24, compared with nearly 1.6 crore barrels in all of 2021, the report said.
India is among a few countries that have been doubling down on Russian crude oil, defying international pressure and sanctions.
It has been reported that Russian barrels are now coming to Asia in larger volumes as buyers across Europe and the US have rejected Russian crude due to the Ukraine move. The key buyers of crude have been India and China.
Russia’s Rosneft PJSC may deal with Indian Oil if the direct purchase scheme takes off, Bloomberg reported. The two entities reportedly have an optional term contract, under which about 1.5 crore barrels a year are to come to India.
The report said it’s still not clear if there will be any upper end of the buying. A source told the news agency that the contract has a built-in clause that says Indian Oil will buy only when it’s economical.
“India’s intake of Russian oil has been very small for many, many years,” the report quoted Vandana Hari, founder of oil market analysis provider Vanda Insights in Singapore, as saying. “So the refineries are not configured to buy a lot of Russian oil.”
The sources also told Bloomberg said both the countries are exploring the possibility of routing the oil through Russia’s Vladivostok Port in the far-east to avoid shipping hurdles from the Baltic Sea in the West.
From Vladivostok Port, crude oil could reach India’s east coast refineries in just 20 days.
The news agency said it tried to reach officials of the Indian Oil for comments but didn’t get any response. The oil ministry also declined to comment.
Russia’s central bank has also offered India rupee-rouble-denominated payments using Moscow’s messaging system SPFS, that could make trading more attractive for India. No decision on this has been arrived yet as the central government is looking into the proposal.