State-run oil marketing companies (OMCs) are in talks with Russia for a long-term crude oil deal, but the agreement is expected to be finalised next year, said an oil ministry source.
India’s oil refiners Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have been negotiating a combined long-term deal with Moscow for supply of crude oil.
The state-run OMCs are looking for a deal as the companies have ramped up supplies from Russia after its war with Ukraine began in 2022.
The three state-run companies are jointly negotiating a deal with Russia, the official told reporters but did not expand on the reason for the delay in reaching a conclusion citing sensitivity of the matter. The companies have been in talks with Moscow for securing a term-deal since mid-2024, according to media reports.
“There is not much (time) left now. Typically, in December, the countries start talking about the next financial year,” the official told reporters when asked about the expected timeline for signing a deal with Russia.
In late May, Reliance Industries Limited (RIL) had signed a one-year deal with Russia's Rosneft to buy at least 3 million barrels of oil a month in roubles. Meanwhile, IOCL’s term-deal with Russia expired in March this year and has not been renewed since then.
India’s appetite for Russian crude oil has grown significantly since 2022 from mere 0.2 percent share in total crude imports before the Russia-Ukraine war to around 40 percent now.
Changed market dynamics
Regarding the country’s term-deals with Russia and other suppliers, the official said the global oil market has witnessed changes in the last year and India would negotiate a term-deal with countries accordingly.
“Negotiating positions on both sides are different from last year because the market is very different. Every year when the market changes, people change negotiating strategies. What has changed is that worldwide people are bringing down their estimates of world (oil) demand, be it IEA or OPEC. We are a country where demand is increasing in a world where demand is decreasing,” the official said.
India, where oil demand is likely to grow exponentially in the coming years, is expected to ask for better prices from its suppliers as crude oil demand is declining globally. Oil minister Hardeep Singh Puri has on several instances mentioned that the country currently holds the “market card” and would use it to its benefit.
In the latest report, the International Energy Agency (IEA) trimmed its 2025 global oil demand amid weak Chinese demand. World oil demand would rise by 950,000 barrels per day (bpd) in 2025, down 30,000 bpd from the previous forecast, the IEA said. In contrast to the global trend, India’s demand for oil is expected to grow.
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