Indian state-run refiner BPCL is in talks with Rosneft to buy about 6 million metric tons (43.8 million barrels) of discounted Russian crude at a price based on the Dubai benchmark, according to three sources with direct knowledge of the matter.
The deal would deepen India's commitment to its now-biggest oil supplier in the wake of Western sanctions on Moscow and mark a continued shift by Rosneft to pricing its oil against the Middle Eastern benchmark used in Asia and away from the Europe-dominated Brent.
Under the pending deal, Rosneft would deliver the equivalent of 6 to 7 cargoes of about 700,000 to 720,000 barrels each per month through March 2024 to Bharat Petroleum Corp Ltd (BPCL), according to the sources, who declined to be named as they were not authorised to speak to media.
Talks are at an advanced stage for a contract, with both sides working out details including terms of payment, the sources added.
BPCL and Rosneft did not respond to requests for comment.
A deal, which needs approval from BPCL's board, would further expand the share of Russian oil flowing to the world's third-largest oil importer.
Russia has become India's top oil supplier, with a 40% share, after diverting supplies away from Europe.
Indian refiners, which in the past rarely bought Russian oil due to high transport costs, are snapping up crude sold at a discount after some Western entities and nations shunned purchases from Moscow following its invasion of Ukraine.
European Union nations stopped buying Russian oil from Dec. 5 and the Group of Seven (G7) countries joined the EU in imposing a price cap on Russian crude of $60 per barrel to curb Moscow's revenues.
Russian crude sold to BPCL would be priced at a discount of $8 per barrel to the Dubai benchmark, the sources said.
Indian Oil Corp, the country's top refiner, struck a deal in April with Rosneft for up to 1.5 million metric tons of oil per month priced against the Middle East benchmark at a discount of $8 to $10 per barrel, according to sources.
Rosneft has been gradually moving from the Europe-dominated Brent benchmark because Russian oil sales have mostly shifted toward Asia after Europe shunned purchases from Moscow.
Both benchmarks are denominated in dollars and set by S&P Global Platts, a unit of U.S.-based S&P Global Inc.
The Dubai benchmark is heavily influenced by Asian and Middle Eastern oil trading, while Brent is mostly used to price crude from Europe, Africa and South America.
Russia has been rerouting its energy supplies from traditional markets in Europe to Asia, mainly India and China, since the West imposed wide-ranging sanctions, including an embargo on seaborne Russian oil imports.
BPCL, like most Indian refiners, makes spot purchases of Russian oil, mostly from traders.
In the new contract under discussion, BPCL aims to import various Russian oil grades including Sokol, Varandey, and Urals, the sources said.
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