Page 7 - FSUOGM Week 18 2022

FSUOGM COMMENTARY FSUOGM

Indeed, India is estimated to have already the trade between the two would be settled using
bought more than twice as much crude from a rupee-ruble-denominated mechanism. How-
Russia in the two months since the invasion of ever, no final decision on how to proceed with
Ukraine as it did in the whole of 2021. payments had been taken as of May 1.
This week, Reuters cited multiple sources
familiar with the matter as saying that Indian Stake for sale
refiners were in talks over a potential oil deal, While India will be keen to maintain relations
which could see them importing millions of with Russia over the longer term, it seems
barrels of crude from Russia. According to the likely that the country’s refiners will be open
sources, Indian Oil Corp. (IOC) – the country’s to changing their position if the discounts on
largest refiner – Bharat Petroleum Corporation offer shrink or sanctions become more diffi-
Ltd (BPCL) and Hindustan Petroleum Corpo- cult to circumvent. However, new partnerships
ration Ltd (HPCL) are negotiating the deal with between Indian and Russian companies could
Russia’s Rosneft. extend beyond refiners buying crude, including
IOC is reported to be negotiating to import through a potential takeover of stakes or projects
6mn barrels per month of oil, with an option to being abandoned by Western companies.
buy a further 3mn barrels, while BPCL is in talks According to a separate Reuters report from
to import 4mn barrels per month and HPCL is last week, the Indian Ministry of Petroleum and
seeking 3mn barrels. They are said to be seek- Natural Gas has spoken with ONGC Videsh
ing supply from June. The sources added that Ltd (OVL), IOC, Bharat Petro Resources Ltd
Rosneft was also in similar talks with Chinese (BPRL), HPCL subsidiary Prize Petroleum, Oil New partnerships
buyers over potential supply deals. India Ltd (OIL) and GAIL (India) about the with India
According to one of the sources, the volume possibility of acquiring BP’s stake in Rosneft.
and duration of the deals could change depend- This comes after the UK-listed super-major could extend to
ing on the extent of discounts offered, and the announced its intent to exit its Russian invest-
impact of sanctions. ments in February. a takeover of
The ministry is also reported to have asked
Challenges OVL to consider buying ExxonMobil’s 30% Russian assets
Indian buyers will have to proceed carefully stake in the Sakhalin-1 project in Russia, in being abandoned
given the current sanctions regime. Reuters’ which it already owns 20%. ExxonMobil is exit-
sources said supplies could be delivered through ing its stake in Sakhalin-1, but as the operator by Western
non-sanctioned intermediaries and trading of the project, it has warned that its withdrawal
companies based in countries that have not needs to be carefully managed. companies
imposed sanctions on Moscow. As with Russian oil, Indian companies may
Thus far since the start of the war, India’s be interested in buying stakes in Russian assets
refiners have been buying Russian oil from trad- at discounted rates given the current circum-
ing companies on a delivered basis. However, stances. However, one of Reuters’ sources
major traders Vitol and Trafigura are winding warned that Indian players had yet to start due
down Russian oil purchases in anticipation of diligence processes and would need to study the
new EU sanctions taking effect from May 15. impact of sanctions closely in order to assess the
Separately, Indian media reported that risk of investments becoming stuck in Russia.
Russia and India were exploring alternative This comes after ExxonMobil’s Russian unit
payment mechanisms in a bid to circumvent declared force majeure on its Sakhalin-1 oper-
sanctions. And according to sources cited by ations last week, owing to sanctions making it
Bloomberg last week, Russia has offered India a increasingly difficult to ship crude out of Russia.
dual-payment mechanism that would allow for While the super-major is in the process of with-
more trade to be carried out in local currencies. drawing from Russia anyway, the force majeure
The sources said the latest offer from Russia illustrates the challenges that foreign investors in
involved payment for Indian oil imports from Russian oil and gas assets could face. India will
Russia in US dollars or euros while the rest of have to proceed with caution. ™

(File Photo)

Week 18 05•May•2021 www. NEWSBASE .com P7