The operator of the world's largest oil refining complex, India's Reliance Industries, has reached a one-year agreement with Russia's state-controlled oil company Rosneft to purchase oil in rubles, Reuters reported on May 28.
Four sources familiar with the matter told Reuters that Reliance Industries is set to purchase at least 3 million barrels of oil a month in the Russian currency from Rosneft.
Russian President Vladimir Putin has long sought to move away from the Western banking and financial systems. The use of rubles to purchase oil marks an alternative approach as to how India and Russia facilitate trade despite Western sanctions.
Following the sanctions imposed against Russia over its invasion of Ukraine, India has become a key buyer of Russian oil, second only to China, purchasing its oil in Indian rupees, dirhams, and Chinese yuan.
This month, India's imports of Russian oil rose to a nine-month high after shipments from non-sanctioned tankers of the Russian Sovcomflot company resumed, Reuters reported on May 21, citing data from shipping and trade sources.
The new agreement comes as India's government made a rare request to its oil refiners, including privately operated Reliance Industries, to lock in at least a third of their contracted supply from Russia under a long-term deal.
According to Reuters, the one-year agreement which took effect April 1, will also secure oil for Reliance Industries at a discounted rate as members of the Organization of the Petroleum Exporting Countries (OPEC) expect to extend voluntary supply cuts beyond June.
"India is a strategic partner for Rosneft oil company," Rosneft told Reuters in a statement. "Cooperation with Indian companies includes projects in the field of production, oil refining and trading of oil and petroleum products."
The company declined to confirm the deal with Reliance Industries, stating that it will not comment on confidential agreements with partners.
In the first month of the fiscal year 2024/25, Indian refineries imported almost 1.8 million barrels per day of Russian oil, an increase of about 8.2% compared to the previous month.
New Delhi has maintained a vibrant economic partnership with Moscow amid the all-out war against Ukraine, much to the dismay of Western countries.
The payments for the oil will reportedly be made through India's HDFC Bank and Russia's Gazprombank.
Martin Fornusek
