IOC signs first term contract for Russian crude; Rosneft may bid for BPCL

A logo of Indian Oil is picture outside a fuel station in New Delhi | Photo: Reuters
After establishing a foothold in the Indian petroleum market by buying out Essar Oil in 2017, Russian state-owned firm Rosneft today signed an agreement with Indian Oil Corporation for exporting 2 million tonne of Urals-grade crude oil to India this year.

Rosneft is also expected to bid for Indian government-owned Bharat Petroleum Corporation Ltd (BPCL) though it already holds 49 per cent in Nayara Energy, the erstwhile Essar Oil. Nayara owns a 20-million-tonne refinery at Vadiar, Gujarat and has a network of 5,600 petroleum retail outlets across India.

The crude purchase agreement with IndianOil was signed during a meeting between Union Minister of Petroleum and Natural Gas and Steel Dharmendra Pradhan and Rosneft chairman and CEO Igor Sechin.

The long-term contract is a part of India’s strategy for diversifying the country’s crude oil supplies from non-Opec countries, and a part of the five-year roadmap for bilateral cooperation in the hydrocarbons sector that was signed during Prime Minister Shri Narendra Modi’s visit to Vladivostok last September, said a press release from the ministry of petroleum and natural gas.

"The addition of Russia as a new source for crude oil imports by India’s largest refiner will go a long way in mitigating the risks arising out of geo-political disruptions. The new arrangement would also usher in price stability and energy security for India, which is witnessing robust growth in demand for petroleum products. It will also open up the avenues for other PSU oil refiners to enter into similar term contracts for import of Russian crude oil," the release said.

Both sides agreed to take forward mutually aligned priorities, including preparing a roadmap for Indian investments in the Eastern Cluster projects of Russia. It was noted that the four Indian oil and gas Public Sector Undertakings (PSUs) have already submitted the Expression of Interest to Rosneft to participate in the project. In order to negotiate the terms of Indian companies entering Vostok Oil in the shortest time possible, it was agreed to create a working group of representatives of Russian and Indian companies.

During the meeting, both leaders reviewed the ongoing investments between Indian oil and gas PSUs and Rosneft, and discussed further enhancing energy cooperation and strengthening hydrocarbons
engagement, both on investment front as well as sourcing natural gas and crude oil. During the meeting, Pradhan said that hydrocarbon is an important pillar of the bilateral strategic partnership. “Indian oil and gas companies value their association with Rosneft, one of the important companies partnering in India’s energy security objectives.”

Both sides agreed to take forward mutually aligned prioritiesdiscussed during Pradhan’s visit to Russia in September last year, including preparing a road-map for Indian investments in the Eastern Cluster projects of Russia specially in the Arctic. Pradhan said Indian companies especially Engineers India Limited have considerable expertise in providing engineering consultancy as well as executing mega projects across the hydrocarbon value chain.

Sechin indicated his readiness to intensify cooperation further to strengthen India’s energy security and work jointly with Indian oil and gas companies.

The crude oil being sourced under the contract will be loaded in Suezmax vessels at Novorossiysk port of Russia and will come to India, bypassing Straits of Hormuz.

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