India seeks united front as it pursues long-term Russian oil deals

The Ministry of Petroleum and Natural Gas recently directed state processors like Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp to coordinate with Reliance Industries Ltd, India’s largest private refiner.

India has asked both its state-run and private refiners to forge a united negotiating front as the country pursues long-term oil import deals with Russia, according to people familiar with the matter.

The Ministry of Petroleum and Natural Gas recently directed state processors like Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp to coordinate with Reliance Industries Ltd, India’s largest private refiner. The goal is to collectively negotiate better terms from Moscow on pricing and supplies.

India has become one of the biggest buyers of Russian crude in recent months, taking advantage of discounted prices from Western sanctions over the Ukraine invasion. However, the purchases have been made via spot and short-term contracts. New Delhi is now seeking to lock in assured long-term supplies.

By banding its refiners together, India likely hopes to bolster its negotiating leverage with Russia compared to companies trying to strike deals individually. Reliance’s involvement is seen as key given its ability to process discounted Russian grades at maximum rates.

Neither the ministry nor the companies have officially commented on the negotiations. The people familiar with the talks spoke on condition of anonymity.

India’s overtures to Russia highlight the difficulty in completely shunning Russian energy for a country that relies heavily on imports to meet demand. Surging crude prices have compounded economic strains.

While India has avoided violating Western sanctions, it has increased purchases of attractively-priced Russian oil shunned by many other economies to bolster its struggling rupee and rein in a ballooning energy import bill.

Securing a long-term Russian supply contract could further institutionalize those trading ties despite international pressure to cut economic links with Moscow over its Ukraine invasion.

It remains to be seen whether Russia will be amenable to a unified Indian negotiating bloc and what precise terms on pricing and supply volumes would be acceptable to both sides. Analysts say New Delhi has considerable leverage due to its status as a key Russian energy market.