Russia’s state-owned oil firm Rosneft has agreed to supply nearly 500,000 barrels of crude oil per day to Indian private refiner Reliance Industries, marking the largest energy deal between the two countries, according to three sources familiar with the negotiations.
The comprehensive 10-year agreement represents 0.5% of the global oil supply and is valued at approximately £10.3 billion annually. The contract is set to further strengthen energy relations between India and Russia, which continues to face Western sanctions due to its involvement in the Ukrainian conflict.
Neither Rosneft nor Reliance provided detailed comments about the agreement. Reliance stated that it works with international suppliers, including those from Russia, and bases its deals on market conditions. The company declined to elaborate, citing the confidentiality of supply agreements.
The timing of the deal is notable, coming ahead of a planned visit by Russian President Vladimir Putin to India. It also follows statements by then U.S. President-elect Donald Trump about his intentions to mediate between Moscow and Kyiv.
Russian oil has become a crucial component of India’s energy strategy, currently accounting for more than a third of the country’s energy imports. India emerged as the largest importer of Russian crude after the European Union imposed sanctions on Russian oil imports in response to the 2022 invasion of Ukraine.
With no sanctions on Russian oil, Indian refiners have capitalised on the more affordable crude supply. Sanctions have effectively reduced Russian oil prices by £2.40 to £3.20 per barrel compared to alternative sources.
The rising Russian oil imports by India have directly impacted rival Middle Eastern producers. The Reliance-Rosneft agreement represents a significant challenge to competitors, including Saudi Arabia, in the increasingly competitive global oil market.
The Indian market has become particularly attractive to oil producers due to its rapid growth and increasing importance in global energy demand, especially as growth in the top importer, China, begins to slow.
Under the detailed terms of the agreement, Rosneft will deliver 20-21 Aframax-sized cargoes (80,000 to 100,000 metric tons) of various Russian crude grades and three cargoes of approximately 100,000 tons of fuel oil each month. These shipments will be supplied to Reliance’s extensive refining complex in Jamnagar, Gujarat, which is recognised as the world’s largest.
Both parties have built flexibility into the contract, agreeing to annually review pricing and volumes to adapt to changing market dynamics. In 2024, Reliance had already established a deal with Rosneft to purchase 3 million barrels of crude monthly, with Rosneft also selling crude to Reliance through intermediaries.
The new agreement represents approximately half of Rosneft’s seaborne oil exports from Russian ports, significantly limiting supply availability for other traders and intermediaries.
Reliance’s Russian oil imports have been steadily increasing. From January to October, the company imported an average of 405,000 barrels per day of Russian oil, up from 388,500 barrels per day during the same period in the previous year.
The deal was discussed and approved during Rosneft’s board meeting in November. Supplies are scheduled to commence in January and continue for a decade, with an option to extend the agreement for an additional ten years.
Pricing will be determined using differentials to the average Dubai price of the loading month. Light sweet grades such as ESPO and Sokol will carry premiums of approximately £1.20 to £1.60 per barrel, while the primary supply of medium-sulphur and diesel-rich Russian Urals will be priced at a £2.40 per barrel discount to Dubai quotes.