Russia's largest oil firm, state-controlled Rosneft, signed on Wednesday a term agreement with Indian Oil Corporation to raise the supply of Russian crude to India significantly.
The deal was signed by Rosneft's chief executive Igor Sechin during a visit to India, in 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, Rosneft said in a statement on Wednesday.
"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," the Russian company said.
From a negligible buyer of Russia's oil before the Russian invasion of Ukraine, India has become a key export market for Moscow and is importing record volumes of Russian crude. In February, Russia remained India's top oil supplier for a fifth consecutive month.
Russia has been redirecting most of its crude oil exports to China and India since the EU and the G7 announced plans to embargo seaborne oil imports from Russia and set a price cap on the crude if it is to be shipped to third countries using Western tankers and insurers.
India is not abiding by the G7 price cap as it seeks opportunistic purchases of cheap crude, and it doesn't intend to.
India has not committed to and is not obligated to buy Russian crude oil only below the $60 price cap of the Western nations, a source at the Indian oil ministry told Reuters earlier this month.
India will buy the oil it consumes from "wherever we have to" if the economics are beneficial for the country, Indian Oil Minister Hardeep Singh Puri told CNBC last month.
"Today we feel confident that we'll be able to use our market to source from wherever we have to, from wherever we get beneficial terms," the minister said.
By Charles Kennedy for Oilprice.com
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And now with the new deal between Russia’s oil giant Rosneft and Indian Oil Corporation, Indian imports of Russian crude will go higher.
But the most noteworthy achievement of Rosneft’s CEO Igor Sechin during his visit to India is that Indian oil companies could soon be able to pay in rupees for their imports. This will be a huge blow to the petrodollar from the world’s third largest importer of oil with imports estimated at 5.0 mbd.
India has refused to participate the Western oil price cap or to recognize Western sanctions against Russia and made it clear that it will source its oil needs from wherever it gets beneficial terms.
Meanwhile. Russia has succeeded in finding new markets for its energy exports despite unprecedented Western sanctions against it, bans on its exports of crude and petroleum products and an oil price cap to boot.
Between them, China and India imported in February and March 3.56 mbd with China importing 1.94 mbd and India 1.62 mbd. If purchases of Turkey and other Asian countries and oil traders are added, total Russian crude exports would have exceeded 5.0 mbd.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert
How are those sanction on Russia working out Mr. Kennedy? Self-inflicted pain, isn't it.
One thing is certain. The whole world needs Russian oil and gas. But the flip-side is, the world, can and will go on with, or without the U.S. $$$$ - the petrodollar that is.
Russia and President Putin just shown to the Americans and the world how to do it, and many other countries are taking notice of this fact. Are you? The day of great reckoning is coming.