Indian Economy News

IOC renews deal to buy up to 2 MT of oil from Russia's Rosneft

  • IBEF
  • December 8, 2021

As stated by the Russian oil producer, the nation’s largest oil firm, Indian Oil Corporation (IOC), renewed their deal to buy up to 2 million tonnes of crude oil in 2022 from Russia’s Rosneft. IOC signed a deal with Rosneft Oil Company in February 2020 to import up to 2 million tonnes of oil via the port of Novorossiysk. In 2021, IOC bought just one parcel or shipload when a supply of up to 1.7 million tonnes of crude oil was envisaged, as the cost of transporting the oil made it uneconomical when compared to alternatives.

The deal is to supply 2 million tonnes of oil from the Black Sea port of Novorossiysk, for 2022.

In a bid to diversify its oil import basket, India has tied up supplies from Russia to the US, cutting reliance on the Middle East to meet its oil needs.

The Russian firm mentioned on its website, “Rosneft and IOC signed a contract for the supply of up to 2 million tonnes of oil to India through the port of Novorossiysk by the end of 2022.”

During the visit of Russian President Mr. Vladimir Putin, where he met with Prime Minister Mr. Narendra Modi and held bilateral talks in an expanded format, the signing took place.

The statement said that the leaders of the two countries give great importance to the development of all-around trade, economic and investment co-operation. Energy is one of the main and common areas of interaction between the companies of Russia and India.

Mr. Igor Sechin, Chief Executive Officer of Rosneft stated that “The signing of a new contract for the supply of oil confirms the strategic nature of the long-term partnership between Rosneft and Indian Oil.”

He also stated, “It is important that cooperation between the companies develops in an integral format and covers the entire technological chain - from extraction to the sale of raw materials. I hope that our interaction with Indian Oil will develop within the framework of other projects.”

Listing out the 28 agreements signed during Putin’s visit, India’s Ministry of External Affairs mentioned that the crude oil supply agreement “seeks to renew the previous contract between Rosneft and IOC.”

The MEA said a Statement of Intent of Collaboration with Russian petrochemicals company SIBUR was also signed to explore the feasibility of setting up a dual-feed cracker along with downstream units at its 15 million tonnes a year Paradip refinery situated in Odisha.

IOC is looking for VGO Hydrocracking Technology, Catalytic Iso-dewaxing for lobs, and catalyst regeneration for fixed bed catalyst in another agreement with Gazpromneft.

IOC has already invested in Vankorneft and Taas-Yuryah, two of Rosneft's Russian production projects.

IOC along with ONGC Videsh Ltd, Oil India Limited and Bharat Petro resources owns 49.9% of the Vankorneft subsidiary, since 2016. This company is situated in Krasnoyarsk province and developing Vankar oil and gas condensate field- the largest among the fields that were discovered in Russia in the past 25 years.

Moreover, Oil India and Bharat Petro resources, a consortium of IOC, owns 29.9% of the company Taas Yuryakh Neftegazodobycha, which holds licenses for the area of the Central Block of Srednebotuobinskoe Field and Kurungskiy license area (the other shareholders are Rosneft and BP0.

In 2001, ONGC Videsh, the overseas investment arm of Oil and Natural Gas Corporation purchased a 20% stake in the Sakhalin-1 project.

In the Indian company Nayara Energy, which operates at a 20 million tonnes a year capacity, Rosneft owns a 49.13% stake. It is situated in Vadinar, Gujarat.

According to a Rosneft statement, this refinery is India's second-largest and one of the world's most technologically advanced.

Rosneft stated, “The consortium is reviewing an option of a two-fold increase of the refining throughput at the Vadinar Refinery. In the first stage, the consortium plans to invest USD 850 million towards the building of a petrochemical unit in Vadinar within 2 years.”

Up to 4,50,000 tonnes of polypropylene can be generated by the plant, per year.

A deep-water port is also included in the Nayara Energy’s that can harbor super large Vlcc class tankers and one of the largest retail networks in India with more than 5,600 petrol pumps.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.