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Indian oil marketing companies (OMCs) are in talks with their Russian counterparts to extend the term contracts on crude oil imports for the next calendar year. Russia has become India’s second largest crude oil supplier.
To ensure sustained supply of crude oil, OMCs are taking various measures including discussions on extending the term contract on supply of crude oil to be rolled over to 2023. So far, the refiners have not faced any issues on delivery of crude oil from Russia, the Ministry of Petroleum & Natural Gas said.
The term contract for import of Russian crude is either undertaken on a Delivered at Port (DAP) basis or on Cost, Insurance and Freight (CIF) basis.
The issue was discussed last month during the visit of External Affairs Minister S Jaishankar to Russia for participating in the meeting of India-Russia Inter-governmental Commission on Trade, Economic, Scientific, Technical and Cultural Co-operation in Moscow. The Russian side was led by Deputy Prime Minister Denis Manturov.
During the meeting, Oil Secretary Pankaj Jain discussed with his Russian counterparts about India’s interest in enhancing imports of crude oil. The discussions also included exploring investment opportunities in the oil and gas sector.
India imported a record 1.7 million barrels per day of crude oil from Russia in November with inbound shipments surging to a record high ahead of the European Union’s December 5 import ban and the G7 price cap, according to data collated by S&P Global Commodity Insights.
As per the data from the Commerce Ministry, India imported $16.7 billion worth of crude oil and $1.7 billion of petroleum products from Russia during April-October 2022.
More crude from Russia in 2023
“From a market share of less than 1 per cent in India’s import basket before the start of the conflict (January 2022), Russia’s share of imports in October rose to 4.24 million tonnes (mt), or nearly 1 million barrels per day, taking a 21 per cent share. It was comparable to that of Iraq and higher than Saudi Arabia’s around 15 per cent,” S&P Global Commodity Insights said on Friday.
In October and November, refiners were in a hurry to snap up plentiful cargoes ahead of any potential shipping or policy hurdles due to the EU sanctions on Russian crude. Analysts are of the view that India would continue to buy large volumes of Russian crude in 2023. Indian policymakers have said buying Russian crudes have been advantageous in keeping inflation under control, it pointed out.
“Asian oil markets in 2023 are set to witness a dramatic shift in trade flows as Russian cargo inflows rise while African and US crudes are increasingly diverted to Europe. At the same time, market participants are expecting the flow of Asian oil products to countries looking to fill the gap caused by EU sanctions on Russian products, due in February 2023,” S&P said.
The sixth round of European sanctions on Russia came into effect from December 5, which bans import of seaborne crude by the EU, shipping, insurance and financial services to importers of Russian crude oil, if the crude is bought at a price higher than $60 per barrel, which has been fixed by the G7 countries.
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