Crude term-deal with Russia hinges on discounts offered: BPCL

For the spot purchase, discounts on Russian oil have come down to $3 per barrel in the recent months.

Bharat Petroleum Corporation Ltd (BPCL) is in talks with Russia for deeper discounts on the purchase of Russian oil, Vetsa Ramakrishna, the company’s director of finance has told Moneycontrol.

BPCL is seeking a discount of $5-6 a barrel for a term deal with Russia and talks with Moscow are still on, Ramakrishna told Moneycontrol on February 11 on the sidelines of India Energy Week 2025.

Refiners prefer long-term agreements, or term deals,  for crude oil at a fixed price and volume, as they are considered better than spot contracts which tend to be volatile. 

India’s state-run oil refiners Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL) and BPCL purchase Russian oil from the spot market.

Indian Oil had a term deal with Russia but it ended in March 2023 and has not been renewed yet.

The three state-run oil marketing companies (OMCs) are jointly negotiating a term deal with Russia but have not been successful so far.

Ramakrishna said BPCL is open to a joint deal with other state-run OMCs or a standalone one with Russia.

In recent months, Russians cut spot purchase discount to $3 a barrel, which declined further after the latest round of US sanctions on Russian oil producers and tankers, BPCL chairman and managing director G Krishnakumar told Moneycontrol.

Last year, Russia offered a discount of $8-$10 a barrel.

Russian oil accounts for around 30 percet of BPCL's total procurement.

Ample crude supply

BPCL, however, foresees no impact on the availability of crude on account of the US sanctions, as it has tied up with several other oil suppliers, Ramakrishna said.

The company has already secured half of its total Russian oil requirement for March delivery and expects the remaining supply to be booked soon, he said.

BPCL gets around 13-14 cargoes of Russian crude oil in a month. BPCL faced a shortage of only two to three cargoes of Russian oil in February, which the company replaced with Middle East supplies, Ramakrishna said.

India’s imports of crude from Russia spiked in January despite the US sanctions. India imported 1.67 million barrels per day (bpd) of crude from Russia, which was 13 percent more than in December. Russia supplied 1.48 million bpd of crude oil to India in December.

Russia is India’s largest crude supplier, making up for over 30 percent of the country’s total oil imports, a significant rise from 0.2 percent prior to the war between Ukraine and Moscow in 2022.

BPCL will on February 13 sign a term deal with the UAE’s Abu Dhabi National Oil Company (ADNOC) for the supply of liquefied natural gas (LNG).

The India Energy Week, which opened on February 11, is being held in New Delhi and will continue till February 14.