State refiners cut dependence on Russian oil as private firms boost imports

During the last month, while the state-run refiners were cutting their reliance on Russian crude, private players were stepping up procurement

Amid mounting pressure from the United States over purchases of Russian crude, both private and state-run Indian oil companies are adopting different approaches to the procurement of discounted supplies from Moscow.

 

According to a report by The Economic Times, while the state-run refiners are cutting their reliance on Russian crude, private players stepped up procurement last month.

Changing stance

Citing data from Kpler, the news report noted that in September, state-run refiners’ imports averaged 605,000 barrels per day (bpd), marking an average decline of 32 per cent from their April–August level. The procurement was down 22 per cent from August, and a steep 45 per cent from June levels.   

Meanwhile, private refiners secured 979,000 bpd of Russian crude, marking an average increase of 4 per cent from their April–August level. While the levels remained largely unchanged from June, the procurement increased 8 per cent from August, The Economic Times report said.

 

Additionally, for state-run oil majors, just one in five barrels accounted for Russian crude in September, whereas it made up two in three barrels imported by private refiners. The news report also noted that a decline in state-run purchases brought overall Russian imports down 6 per cent from August and 13 per cent below the April–August average.

Rising global pressure

One of the main reasons for declining imports of Russian oil for state-run firms is the pressure from the US. Starting August 27, the Donald Trump administration slapped a hefty 50 per cent tariff on India, which included a 25 per cent penalty for importing Russian crude.

 

Last month, US Congressman Brian Fitzpatrick claimed that Indian refiners are indicating plans to reduce their imports of Russian oil due to sustained US pressure, following a high-level intelligence visit to India.

 

During his visit, Fitzpatrick said he engaged in strategic discussions with senior officials, including External Affairs Minister S Jaishankar and National Security Advisors. He added that the dialogues have led to ‘early signals’ from Indian refiners indicating a potential reduction in Russian oil imports.

Other key factors

While Finance Minister Nirmala Sitharaman had said that India will continue to procure oil from Russia, the state-run firms seem to be prioritising security over profits. According to The Economic Times, several other factors, such as lesser discounts and diversification plans, are also among the reasons behind the decline in the share of Russian oil.

Private players reap benefits

On the other hand, private firms, which hold only about 10 per cent of the local retail market, are chasing profits through increased imports of discounted crude.

 

According to the report, Reliance Industries benefits from a term deal with Rosneft, offering deeper discounts than spot market purchases, whereas the Rosneft-backed refiner Nayara Energy remains overly dependent on Russian oil, unable to secure crude elsewhere.