With diplomatic tensions between Russia and the West continuing, the biggest country in the world has been seeking ways to increase its energy exports to markets in Asia.
On Wednesday, there was a notable development as Rosneft, the state-owned oil company of Russia, and Indian Oil Corp, the leading refiner in India, signed a long-term agreement to significantly boost oil supplies and expand the variety of oil grades shipped to India. According to a press release issued by Russia’s energy giant, the deal was signed during a working trip to India by Igor Sechin, the CEO of Rosneft.
“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 press release reads.
The discussions also focused on the ongoing implementation of joint projects between Rosneft and its Indian partners, such as Sakhalin-1, Taas-Yuryakh and Vankorneft.
In 2022, Russia became one of India’s top five trading partners for the first time, with bilateral turnover of $38.4 billion, largely driven by energy trade. India’s oil purchases from Russia increased more than 20 times last year, according to Russian Deputy Prime Minister Alexander Novak.
“Most of our energy resources have been redirected to other, friendlier markets. If we look at oil supplies to India, they increased 22 times last year,” Russian Deputy Prime Minister Alexander Novak said, also mentioning that supplies to China and other markets have also grown due to “the great work that has been done in the industry.”
Energy-rich Russia has faced a barrage of sanctions from the West over what Moscow calls a “special military operation” in Ukraine. These sanctions have forced Russia’s crude oil trade into obscurity, with numerous oil importers steering clear of the country’s energy firms. Consequently, spot prices for Russian crude oil have hit record lows compared to other grades. However, India has continued to buy Russian oil, even after the G7 implemented a price cap on Russian oil late last year.
As an oil-hungry nation with a population of 1.4 billion, India relies on imports to meet 85 percent of its crude oil needs. In the 2021-2022 fiscal year, the country consumed 202.7 million tonnes of petroleum products, up from 194.3 million tonnes in the previous year but still below pre-pandemic levels, with demand standing at 214.1 million tonnes in 2019-2020.
India currently ranks as the world’s third-largest oil consumer and importer. The country has been trying to cut its oil dependence on the Gulf countries by increasing its import from Russia and the US.