State-owned Indian Oil Corp (IOC) on Wednesday signed first term contract for importing Russian crude oil as the world's third largest energy consumer looks to diversify its sources away from the volatile Middle East.
IOC signed the contract to import up to 2 million tonne of Urals grade crude oil from Rosneft of Russia, Oil Minister Dharmendra Pradhan said after meeting the Russian firm's CEO Igor Sechin.
India is 83 per cent dependent on imports to meet its oil needs. Two-thirds of the imports come from the Middle East, Iraq being the biggest supplier followed by Saudi Arabia.
Pradhan and Sechin held talks during which they "reviewed the ongoing investments between Indian oil and gas PSUs and Rosneft and discussed further enhancing energy cooperation and strengthening hydrocarbons engagement both on investment front as well as sourcing natural gas and crude oil," an official statement issued after the meeting said.
Both sides, it said, agreed to take forward mutually aligned priorities, including preparing a road map for Indian investments in the Eastern Cluster projects of Russia.
"It was noted that the four Indian oil and gas PSUs have already submitted the Expression of Interest to Rosneft to participate in the project. In order to negotiate the terms of Indian companies entering Vostok Oil in the shortest time possible, it was agreed to create a working group of representatives of Russian and Indian companies," it said.
Not just a stake in oil and gas fields, India also pitched for getting engineering consultancy. "Engineers India has considerable expertise in providing engineering consultancy as well as executing mega projects across the hydrocarbon value chain," the statement said adding Sechin indicated his readiness to intensify cooperation to further strengthen India's energy security and work jointly with Indian oil and gas companies.
Both leaders also witnessed the signing of the first-ever term contract between IOC and Rosneft for importing 2 million tonne of Urals grade crude oil during 2020 to India.
"Sourcing of Russian crude oil through long term contracts is a part of India's strategy for diversification of the country's crude oil supplies from non-OPEC countries and a part of the five-year roadmap for bilateral cooperation in the hydrocarbons sector that was signed during Prime Minister Narendra Modi's visit to Vladivostok last September," it said.
The crude oil, being sourced under the contract, will be loaded in Suezmax vessels at Novorossiysk port of Russia and will come to India bypassing Straits of Hormuz.
The addition of Russia as a new source for crude oil imports by India's largest refiner will go a long way in mitigating the risks arising out of geo-political disruptions.
"The new arrangement would also usher in price stability and energy security for India, which is witnessing robust growth in demand for petroleum products. It will also open up the avenues for other PSU oil refiners to enter into similar term contracts for import of Russian crude oil," it added.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)