Reliance, Rosneft ink largest-ever India-Russia oil supply deal
What's the story
Russia's state oil company, Rosneft, has struck a deal to supply nearly 500,000 barrels per day (bpd) of crude to Indian private refiner Reliance Industries.
The 10-year contract is the largest energy transaction ever between India and Russia.
The deal is estimated to be worth around $13 billion annually, accounting for 0.5% of the global oil supply.
Here's more about it.
Strategic partnership
Deal strengthens India-Russia energy ties amid Western sanctions
The deal comes at a time when Russia is reeling under Western sanctions over its invasion of Ukraine.
Nevertheless, India has emerged as the biggest importer of Russian crude oil after the EU sanctioned Russian oil in the wake of the 2022 Ukraine invasion.
Indian refiners have been reaping the benefits of cheaper Russian crude, which is $3 to $4 lower per barrel than competing grades due to the sanctions.
Market impact
Rosneft-Reliance deal challenges Middle Eastern oil producers
The Rosneft-Reliance deal presents a major challenge for Middle Eastern oil producers such as Saudi Arabia, who are vying for a stake in India's fast-growing energy market.
Under the agreement, Rosneft will supply 20-21 Aframax-sized (80,000 to 100,000 metric tons) cargoes of different Russian crude grades and three cargoes of fuel oil every month to Reliance's Jamnagar refining complex in Gujarat.
The pricing and volumes will be reviewed annually by both companies to adapt to market dynamics.
Supply dynamics
Deal accounts for half of Rosneft's seaborne exports
The new deal with Reliance accounts for nearly half of Rosneft's seaborne exports from Russian ports.
Reliance imported an average of 405,000 bpd of Russian oil from January to October, compared to 388,500 bpd during the same period last year.
The deal was discussed and approved at Rosneft's board meeting in November, as per Reuters. Supplies will start in January and could continue for another decade beyond the initial term.