India, the third largest oil importer and a major growing economy, is a key market for the oil producing nations particularly with recessionary pressures around and with expectations of oil prices remaining at current low levels.
After the sharp spike in FY23, Russia’s share in India’s oil imports may not rise further in the current year, analysts said, but they added that the country will likely continue to add more crude oil suppliers from different geographies at better rates.
“India will not like to rely too much on just one country or one geography. They would like to diversify. New regions like Guyana and Brazil are being tapped,” said Prashant Vasisht, vice president and co-head, corporate ratings, ICRA. Russian oil, which was less than 1% of India’s crude import pre-Ukraine crisis last year, accounts for around one-third now. And, share of Opec nations in India’s oil imports came down to 46% from 72% in the past one year.
Even for the full financial year 2022-23, Russia exported 56.4 million tonne of crude oil, while Iraq accounted for 53 million tonne and Saudi Arabia 43 MT. In FY22, Russian oil import was mere 4.4 MT, as per government data (see chart). However, the share of Russian oil may not go beyond the current level as there is a limitation in taking more of Urals, a mid-sour crude, and also due to the term contracts with crude suppliers that are generally at 70:30 level.
“The surge in Russian crude oil imports is due to the discounts because of the sanctions, otherwise the logistics costs are higher for Russia. Companies keep on assessing for better deals,” said former petroleum secretary RS Pandey.
India is in talks with Guyana for sourcing oil from its oilfields under long term agreements at preferential rates. Last year, state-run Indian Oil Corporation signed a deal with Brazil’s Petrobras and Colombia’s Ecopetrol.
“With Guyana, we are even talking about discounts to make it competitive with other crude suppliers as it’s a longer journey. Even both Saudi Arabia and Iraq are lowering the prices for large importers India and China,” said Vasisht. India, the third largest oil importer and a major growing economy, is a key market for the oil producing nations particularly with recessionary pressures around and with expectations of oil prices remaining at current low levels.
Source:financialexpress.com