State-run Indian Oil Corporation (IOCL) has signed a term agreement with Russian oil giant Rosneft to enhance the crude oil trade between both the countries including diversifying the grades.

The agreement was part of Rosneft Oil Company’s CEO Igor Sechin’s official visit to India. Both the companies also discussed making payments for India purchasing crude oil from Russia in their national currencies.

“During the trip, Rosneft Oil Company and IOCL signed a term agreement to substantially increase oil supplies as well as diversify the grades to India. Sechin and IOCL Chairman Shrikant Madhav Vaidya signed the agreement in the presence of India’s Minister of Petroleum and Natural Gas H S Puri,” Rosneft said in a statement on Wednesday.

Sechin made a working trip to India, during which he met with officials from the Indian government, as well as with the heads of some of the country’s largest oil and gas companies, it added.

Payment mechanism

“The parties also discussed ways of expanding cooperation between Rosneft Oil Company and Indian companies in the entire value chain of the energy sector, including possibilities of making payments in national currencies,” Rosneft said.

Sources said that India refiners have already started making payments for some supplies in Russian Roubles and UAE Dirham.

Particular attention was paid to the ongoing implementation of joint projects between Rosneft and its Indian partners, including Sakhalin-1, Taas-Yuryakh and Vankorneft, it added.

The parties also noted a significant increase in turnover between Russia and India. According to the latest statistics from the Ministry of Commerce and Industry of India, Russia for the first time in history has become one of the five largest trading partners of India-the volume of trade between the countries in 2022 reached $38.4 billion.

“Thus, the goal set by the leaders of our countries to increase turnover to $30 billion by 2025 has been achieved in advance,” Sechin said.

Enhancing cooperation

Rosneft has been actively developing the integrated format for cooperation with Indian partners along the whole processing chain, from extraction to refining and oil product sales, the company said.

Indian companies such as ONGC Videsh, Oil India, IOCL and Bharat PetroResources have been owners of 49.9 per cent of Rosneft’s subsidiary JSC Vankorneft since 2016. Located in Krasnoyarsk Territory, it develops the Vankorskoye oil and gas condensate field, which is one of the biggest fields discovered and brought on stream over the last 25 years in Russia.

Besides, Oil India, IOCL and Bharat PetroResources also own 29.9 per cent of Taas-Yuryakh Neftegazodobycha, which develops the Central Block and the Kurungsky license block of the Srednebotuobinskoye field which is among Rosneft’s largest assets in Eastern Siberia.