New Delhi: The government has asked its state-run oil refiners and private company Reliance Industries Ltd. to collaborate on negotiating a long-term supply agreement with Russia, Bloomberg reported.
According to the report, the government wants its refiners to secure at least one-third of their contracted supply from Russia at a fixed discount in order to shield the nations economy from price fluctuations.
The request was informal, the report said, citing the sources who requested anonymity due to the confidential nature of the discussions.
The sources told Bloomberg that Reliance is not expected to join the governments efforts for collaboration as it is unlikely to share sensitive information as it competes with state-run oil refiners in the domestic market.
India has been a major buyer of Russian crude since the Ukraine invasion, but stricter enforcement of US sanctions has constrained this trade, forcing refiners to purchase more expensive oil.
India is urging its state refiners to work together and enhance their bargaining power in supply negotiations instead of competing, the report said.
There is a history of collaboration among state refiners, who have previously engaged in joint talks with suppliers in the Middle East and West Africa to secure better terms. However, it is unusual for India to seek assistance from a private refiner, according to the report.
State refiners have been eyeing oil discounts of more than $5 per barrel compared to Dated Brent, but Russia is offering a $3 discount and is reluctant to adjust, the report said. After the war began, the discount for one Russian grade surged to over $30 before narrowing.
Indian Oil is the only state refiner that previously had a long-term supply deal with Russia, which expired at the end of March and has not been renewed due to disagreements over volumes and price.
