Indian Oil not in ‘active negotiations’ with Russia on crude term-deal amid geopolitical uncertainties: CMD

Indian Oil previously had a crude-term deal with Russia, which expired in March 2023, and has not been renewed since.

State-run Indian Oil Corporation Limited (IOCL) is not actively looking at a crude oil term-deal with Russia amid the geopolitical uncertainties, said the chairman and managing director AS Sahney on April 30.

With the US imposing sanctions on Russian oil entities and evolving trade relations between countries, Indian Oil does not consider signing a term-deal with a new player “prudent”, said Sahney addressing a post-results press conference.

“We are open to term (deal with Russia). But, are we in any negotiations? No. As of now, we are not in any active negotiations. We are waiting and watching because every day things are changing. Every day, the situation on tariffs, the situation on sanctions, they are changing. So, in these topsy-turvy conditions, I don't think it is prudent to go in a term-deal with any new player,” said Sahney.

The US, under former President Joe Biden, had on January 10 imposed fresh sanctions on Russian oil entities. The Biden administration had sanctioned Russian oil producers Gazprom Neft and Surgutneftegaz, as well as around 180 tankers shipping oil from Moscow.

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As India ramped up oil imports from Russia following the Ukraine war, state-run oil refiners including IOCL, Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) were negotiating a crude term-deal with Moscow to secure oil supplies from the country.

However, with the current change in global trade relations, Indian Oil comments on a term-deal with Russia highlight a major shift in the company’s stance. To be sure, Indian Oil previously had a crude-term deal with Russia, which expired in March 2023, and has not been renewed since. Indian oil refiners currently procure Russian oil on a spot basis.

Moreover, the share of Russian oil share in Indian Oil’s kitty declined to 22 percent in FY25 from 30 percent in FY24. Sahney said the lower share of Russian oil was solely on account of commercial decisions and not because of the US sanctions imposed on the country.

“All the crude that we are buying (from countries) are totally on commercial basis. It has to meet my requirements, and it has to fit the bill of being commercially viable…So today, 22 percent is not because of the sanctions, because sanctions have come in January and we are talking about the whole year. This was a purely commercial decision. Earlier, it was 30 percent based on commercial decision. Today, it is 22 percent because of commercial decision. Going further as well, it will be commercial decision,” said Sahney.

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The Indian refiners procure Russian oil on discounted prices compared to crude from other countries. However, discounts offered by Russia have largely declined as Moscow finds more destinations to ship their oil.

Sahney refrained from commenting on the current discounts the company receives on procurement of crude oil from Moscow, citing sensitivity of the matter.