Reliance Industries has signed a one-year deal with Russia’s Rosneft to buy at least 3 million barrels of oil a month in roubles, reported news agency Reuters.
The shift in rouble payments comes after Russian President Vladimir Putin’s push for Moscow and its trading partners to find alternatives to the Western financial system.
The agreement with Rosneft will help Reliance Industries to buy oil at discounted rates and this comes at a time when the OPEC+ group of oil producers is expected to extend voluntary supply cuts beyond June.
The OPEC+ group, which includes the Organisation of the Petroleum Exporting Countries (OPEC) and allies like Russia, is set to discuss these output cuts in an online meeting on June 2.
India, the world’s third-largest oil importer and consumer, has become the biggest buyer of seaborne Russian crude since the West halted purchases and imposed sanctions against Moscow after Russia’s 2022 invasion of Ukraine.
India has paid for Russian crude in rupees, dirhams, and Chinese yuan. State-owned refiners have been buying Russian oil from spot markets as they could not finalise term supplies for this year, Reuters had reported earlier.
“India is a strategic partner for Rosneft oil company. Cooperation with Indian companies includes projects in the field of production, oil refining, and trading of oil and petroleum products,” Reuters quoted the Russian company as saying in an email response.
They added that they do not comment on confidential agreements with partners. Rosneft also mentioned that their commercial approaches to determining the value of sold crude are the same for all companies, whether they are private or state-controlled.
There has been no official confirmation from Reliance Industries. Under the deal terms, which started at the beginning of the Indian financial year from April 1, Reliance will buy two cargoes of about one million barrels of Urals crude each month.
There is also an option to buy four more cargoes each month at a discount of $3 per barrel to the Middle East Dubai benchmark, according to the sources mentioned in the report.
Reliance will also purchase one to two cargoes a month of low-sulphur crude oil, mainly ESPO Blend exported from Russia’s Pacific port of Kozmino, at a premium of $1 per barrel to Dubai quotes, the sources added.
Reliance has agreed to make payments for the oil using Russia’s rouble through HDFC Bank and Russia’s Gazprombank.