- Monday, February 24, 2025
The move towards rouble payments aligns with Russian president Vladimir Putin’s plan to explore alternatives to the western financial system for trade amid sanctions.
By: Shubham Ghosh
RELIANCE Industries, the operator of the world’s largest refining complex in India, has inked a one-year agreement with Russia’s Rosneft. According to four informed sources cited by Reuters, the deal entails the purchase of a minimum of three million barrels of oil per month, payable in roubles.
The move towards rouble payments aligns with Russian president Vladimir Putin’s plan to explore alternatives to the western financial system for trade facilitation despite sanctions posed by the US and Europe.
Entering into a term agreement with Rosneft also enables Reliance, a privately held company owned by India’s richest man Mukesh Ambani, to secure oil supplies at discounted rates. The strategic move comes amid expectations that the OPEC+ oil coalition will prolong voluntary supply cuts beyond June.
The OPEC+ coalition, composed of the Organisation of the Petroleum Exporting Countries (OPEC) and its allied partners such as Russia, is slated to deliberate on output cuts in a virtual session scheduled for June 2, the Reuters report added.
India, ranking as the world’s third-largest oil importer and consumer, has emerged as the largest purchaser of Russian crude via seaborne routes following the cessation of western purchases and the imposition of sanctions on Moscow after its invasion of Moscow in 2022.
Notably, India has conducted transactions for Russian crude using currencies such as rupees, dirhams, and Chinese yuan.
According to previous reports by Reuters, state-owned Indian refiners have been tapping spot markets for Russian oil due to their inability to secure term supplies for the current year.
“India is a strategic partner for Rosneft oil company,” the Russian company said in an email to Reuters, adding that it does not comment on confidential agreements with partners.
Rosneft also emphasized that the commercial methodologies for assessing the value of sold crude remain consistent for all entities, irrespective of whether they are privately owned or state-controlled.
Per the terms of the agreement, which commenced at the onset of the Indian financial year on April 1st, Reliance will procure two cargoes comprising approximately a million barrels of Urals crude. Additionally, there is an option to purchase four more cargoes each month, at a discount of $3 per barrel to the Middle East Dubai benchmark, as reported by the sources.
(With Reuters inputs)
