India makes rare request for refiners to join on Russia oil deal

By Rakesh Sharma and Sudhi Ranjan Sen

India has made a rare request to its state-run oil refiners and private processor Reliance Industries Ltd. to jointly negotiate a long-term supply deal with Russia, according to people familiar with the matter.

The government wants its refiners to lock in at least a third of their contracted supply from Russia at a fixed discount to help shield the nation’s economy from volatile prices, the people said, asking not to be named due to the sensitivity of talks. The appeal to join forces was informal, they added.

However, Reliance is unlikely to share sensitive information with the state oil refiners given they’re competitors in the domestic fuel market, stifling the government’s efforts at collaboration, they said.

An oil ministry spokesman didn’t immediately reply to a text message seeking comment. Reliance, Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. also didn’t reply to emails seeking comment.

India has been a major buyer of Russian crude since the invasion of Ukraine, but tighter enforcement of US sanctions crimped the trade and led to refiners needing to buy more expensive oil. India wants state processors to work together and boost their bargaining power during supply negotiations, rather than competing, the people said.

There is precedent for collaboration. State refiners have held joint talks with suppliers in the Middle East and West Africa previously to secure more favorable terms, but it’s unusual for India to request help from a private refiner.

State refiners have been seeking oil at a discount of more than $5 (Rs 416.43) a barrel to Dated Brent, but Moscow is offering crude at a discount of $3 (Rs 249.87) and is showing an unwillingness to budge, according to the people. The discount for one Russian grade blew out to more than $30 (Rs 2,498.68) after the war before narrowing.

Indian Oil is the only state refiner to previously have a long-term supply deal with Russia, but that expired at the end of March and hasn’t been renewed due to a lack of consensus on volumes and price.