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India reportedly angling for

steep discount on Russian oil

POLICY INDIA is reportedly putting pressure on Russia discussion involved the purchase of around
to lower the price of its crude oil to make up for 15mn barrels per month of oil. This is equivalent
the extra challenges that buyers have encoun- to about 10% of India’s total petroleum imports,
tered in the wake of the invasion of Ukraine in they said.
late February, Bloomberg reported on May 4. They also indicated that Russian deliveries to
Sources with knowledge of the matter told the Indian market had increased substantially
the news agency that India had offered to buy since the outbreak of the war in Ukraine. Since late
Russian crude at less than $70 per barrel on a February, they explained, India’s state-owned and
delivered basis during high-level talks between private refinery operators have purchased more
the two countries. This represents a discount of than 40mn barrels of Russian feedstock. This is
nearly $40 per barrel on Brent crude, which was 20% above the total volume of Russian oil ship-
trading at more than $108 per barrel as of May 5. ments to India in the whole year of 2021, accord-
The sources, who spoke on condition of ano- ing to Trade Ministry data cited by Bloomberg.
nymity because the talks were confidential, said India has come under pressure from the
the Indian companies were looking for a deal US and other Western countries to curtail its
with a differential that was substantial enough imports of Russian crude oil. However, Prime
to compensate for the hurdles that now face Minister Narendra Modi and his administration
buyers of Russian crude, such as lack of access have not been willing to do so.
to financing and marine insurance. (See: India As a statement from the government’s press
seen increasingly pivoting to Russia, page 4) They office remarked earlier this week: “India’s legiti-
did not say how the Russian side had responded mate energy transactions cannot be politicised.
to the Indian offer but noted that the deal under Energy flows are yet to be sanctioned.”™

Indian refiners eye Brazilian crude, but few

large-scale term supply deals are likely

POLICY INDIAN refiners are showing more interest in although imports are viable on a long-term basis
the possibility of adding Brazil to their list of oil if they are commercially competitive, compared
suppliers, and India’s Petroleum Minister Hard- with other origins,” he commented.
eep Singh Puri discussed options for long-term Another source inside an Indian refining
supply contracts with Brazil’s Minister of Mines company said to S&P Global Platts that term
and Energy Bento Albuquerque when the latter contracts for Brazilian oil might not always make
visited New Delhi last month. economic sense under current market condi-
Puri and Albuquerque did not sign any con- tions. “We buy Brazilian crude mainly on a spot
tracts during their meeting, though they did basis,” he remarked. “Some other Indian buyers
issue a joint statement affirming the importance have contracts with Mexico.”
of co-operation in the oil and gas sector and He also pointed to higher prices and shipping
recognising Indian companies’ contributions times needed to move oil to India from Brazil
to Brazilian hydrocarbon projects. However, instead of from the Middle East, explaining that
this statement was largely rhetorical in tone, and refinery operators had to take such factors into
industry observers and trading sources told S&P consideration. “Whatever you buy, landed cost
Global Platts last week that current market con- should make sense to alternative grades,” he said.
ditions did not support the signing of many new “In a term contract, it’s the fixed volumes to be
large-scale crude delivery deals. lifted, which is challenging.”
According to an official from one of India’s Meanwhile, one regional oil trader told S&P
state-owned refinery operators, New Delhi is Global Platts that Brazil might not have much
genuinely interested in diversifying the country’s leeway for sending barrels to the Indian market,
oil supply sources. However, oil prices are high as it has already made significant commitments
enough at the moment that Brazilian feedstock to Chinese buyers. “As far as Brazilian crude
is not an ideal alternative, he said. trades flows to Asia [are] concerned, these are
“Brazilian term crude imports at current all Chinese-bound trades and price is decided by
prices above $100 per barrel are not viable, Chinese demand,” he commented.™

Week 18 06•May•2022 www. NEWSBASE .com P7