IOC to buy 2 MT Russian crude oil

New Delhi: Indian Oil Corp has agreed to an annual deal to buy 2 million tonnes of Russian crude oil, a first for any Indian refiner that would help diversify supply sources and cut India’s dependence on conflict-prone Middle East, according to people with knowledge of the matter.

The annual oil purchase deal with Rosneft, Russia’s staterun oil giant, came after months of negotiations, people said. Two other state-run refiners, Hindustan Petroleum and Bharat Petroleum, too are in talks with Rosneft to close annual crude deals for relatively smaller quantities, they said.

A deal with Russia follows annual contracts signed last year for US oil, underlining Indian refiners’ persistent efforts at building new supply bridges with all important oil rich regions across the globe. Indian refiners are also tapping Canadian oil and were a big customer of Venezuelan oil until the production in the strife-torn country dropped dramatically in recent years.

The biggest hurdle in sourcing crude oil from Russia has been high freight rate due to the long sea path to India, a case true of supplies from the US and Canada as well.