The 10-year agreement amounts to 0.5 per cent of global oil supply and is valued at roughly $13 billion per year.
Russia’s state-owned oil firm Rosneft has agreed to supply up to 500,000 barrels per day (bpd) of crude oil to Indian upstream oil and gas major Reliance Industries (RIL) in the largest-ever energy deal between the two countries, Reuters reported on Thursday.
The 10-year agreement amounts to 0.5 per cent of global oil supply and is valued at roughly $13 billion per year at current prices, it said.
The deal will ensure stability in crude oil flows and is part of Rosneft’s efforts to expand its presence in India, officials from the Ministry of Petroleum and Natural Gas said.
Without confirming the size of the agreement, ministry officials said the government was aware of negotiations nearing a final stage between the two companies.
“Commercial contracts are confidential and based on market conditions.
"The government is not involved. However, such a deal will ensure greater stability in supplies,” said an official.
The government official said: “Even when prices remain on a long-term downward trajectory, securing stable flows is of paramount importance.”
Government sources said a deal of this size could give Rosneft more confidence in retaining its global business ties at a time when the United States (US) is reportedly planning to escalate sanctions on Russian firms, particularly its oil sector.
“The incumbent US President seeks to enact a tighter framework of sanctions on Russian entities before he leaves office next month.
"A mega pact with Indian firms would help Moscow send a message at this juncture,” a highly placed source said, under the condition of anonymity.
The agreement will also expand RIL’s exposure to Russian crude oil.
Queries sent to the ministry did not elicit a response until the time of publication.
A RIL spokesperson told Business Standard: “We do not comment on specific details of any supply contract that are confidential in nature.
"As always, any such supplies are compliant with prevailing sanctions policies as applicable to Indian buyers of such feedstock.”
Rosneft did not reply to requests by Reuters for comments.
Rosneft’s India plans
The second-largest Russian company by market capitalisation and one of its highest earners, Rosneft is increasingly making efforts to bolster its presence in.
In early December, Russian President Vladimir Putin highlighted Rosneft’s $20 billion investment in India, without elaborating further.
Energy cooperation is expected to take priority during Putin’s upcoming visit to India, sometime in early next year, the Kremlin has said.
In 2023, Rosneft expressed interest in building a greenfield refinery in India through a joint venture (JV) with public-sector refiners.
Also, Rosneft last year appointed Govind Kottieth Shah to its board — the first such appointment from India.
An industry veteran, Shah had been the chairman of several Indian Oil Corporation (IOCL) JVs, including IndianOil-Adani Gas and IndianOil Total, before joining Rosneft.
Currently, Rosneft-backed Nayara Energy operates more than 6,000 retail fuel outlets in India, with an additional 1,200 in various stages of commissioning.
The company also runs India’s second-largest refinery, located in Gujarat’s Vadinar, with an annual capacity of 20 million tonnes, equivalent to 405,000 bpd.
Responding to queries about Russian oil supplies, the RIL spokesperson said: “Russia is currently the largest supplier of crude oil to India.
"This is well-documented. We are always engaged with several international suppliers, including Russia, to source feedstock for our refinery.
"As per practice, such supply contracts are done for the following year. The number of cargoes will vary depending on market conditions and economics.”
In FY23, the volume of Russian crude in India’s total sourcing mix has remained at nearly 40 per cent since FY23.
“India’s crude oil import bill declined by nearly 15 per cent year-on-year in FY24 even with a slight increase in crude oil imports, mainly due to availability of cheaper Russian crude and the said benefit continued in the first eight months of FY25 but with reduced discounts on Russian crude," said Hardik Shah, director, CareEdge Ratings.
