Reliance Industries and ROSNEFT Sign Historic Oil Supply Agreement: Reliance Industries Limited (RIL) has finalized a monumental 10-year agreement with Russia's state-owned oil giant ROSNEFT, marking the largest energy deal in the history of India-Russia relations. This deal involves the supply of nearly 500,000 barrels per day (bpd) of crude oil, accounting for approximately 0.5% of global oil supply, and is valued at around $13 billion annually based on current market prices.

Under the 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 about 100,000 tons each of fuel oil each month to Reliance's Jamnagar refinery in Gujarat, the largest refinery in the world. The shipments are set to commence in January 2025.

The majority of the supply will be medium-sulphur and diesel-rich Russian Urals that are most popular with Indian refiners and will be priced at a discount of $3 per barrel to Dubai quotes for the following year, two sources said.

This deal is significant as it accounts for nearly half of ROSNEFT's seaborne oil exports, potentially limiting availability for other buyers. India has emerged as a leading buyer of Russian crude, with imports rising from less than 1% before the Ukraine conflict to nearly 40% of its total oil purchases now. The agreement is seen as a means for Russia to maintain its global business connections while facing escalating sanctions from the West.

This agreement comes at a time when Russia is facing significant Western sanctions due to its invasion of Ukraine. As a result, India has emerged as a key buyer of Russian crude oil, especially after many Western nations halted their purchases. The deal is expected to further solidify India's energy ties with Russia while providing Reliance access to competitively priced crude oil.

India, the world’s third-largest oil importer and consumer, has become the leading buyer of seaborne Russian crude after Western nations stopped purchasing it in response to Russia’s invasion of Ukraine in 2022. India has also been making payments for Russian oil in rupees, dirhams, and Chinese yuan. 

The agreement is seen as a strategic move for both companies. For ROSNEFT, it secures a substantial market for its crude oil amidst declining opportunities due to sanctions. For Reliance, it enhances its supply chain stability and positions it favourably in the competitive global energy market.

This landmark deal underscores the evolving dynamics of global energy trade and highlights India's growing role as a significant player in sourcing Russian oil amidst geopolitical tensions.