Reliance Industries Limited (RIL) has entered a landmark agreement with Russia’s state-owned oil producer, Rosneft, to import 5,00,000 barrels of crude oil daily for the next ten years.
Valued at approximately $13 billion annually at current market rates, this deal marks the largest energy partnership between India and Russia.
Strategic Timing Ahead of Putin’s India Visit
The agreement was finalized ahead of Russian President Vladimir Putin’s planned visit to India early next year.
Deliveries under the deal will commence in January 2024, with the option to extend the contract by another decade. The partnership of Reliance Industries and Rosneft accounts for 0.5% of global crude supply, signifying its significance on the global energy map.
Jamnagar Refinery to Process Russian Crude
The crude shipments will be sent to Reliance’s Jamnagar refining complex in Gujarat, the largest in the world.
Both companies have agreed to conduct annual reviews of pricing and volumes to adapt to changing market conditions.
With Western sanctions on Russian oil in place, refiners like Reliance are sourcing Russian crude at discounts of $3 to $4 per barrel compared to Gulf grades.
India’s Evolving Energy Dynamics
India has become the largest importer of Russian crude, surpassing traditional buyers due to sanctions imposed by the U.S., G7, and EU following Russia’s 2022 invasion of Ukraine.
In October 2024 alone, India imported $2.16 billion worth of Russian crude, accounting for 37% of Russia’s total oil exports.
Before the Ukraine war, Russia’s share in India’s crude imports was negligible.
By 2024, it had surged to 41%, while imports from Iraq and Saudi Arabia declined. India now relies on imports for 85% of its crude oil needs, driven by rapid economic growth and a robust refining sector.
Russian Oil Discounts Save India Billions
Discounted Russian oil has provided significant cost savings for India. A study by ICRA estimated that these discounts saved the country $13 billion over FY2023 and FY2024.
However, the benefits were primarily accrued by private refiners like Reliance rather than the broader economy.
A Steady Partnership with Room for Growth
Reliance has maintained a steady relationship with Rosneft, purchasing 3 million barrels of crude monthly under a previous agreement in 2024.
As reported by telegraphindia.com, additionally, Rosneft has supplied crude to Reliance through intermediaries. This new long-term deal solidifies their partnership and reinforces India’s position as a major player in global energy markets.
