Indian state-run Bharat Petroleum Corporation is purchasing crude oil from the Middle East to replace cheaper Russian oil, Reuters said in a report.
According to the report, the Indian refiners are unable to procure about 8 million to 10 million barrels of crude for January, which was previously available in the market.
Indian refiners usually buy cheaper Russian oil in the spot market rather than long-term contracts.
India began importing Russian crude oil after Moscow invaded Ukraine, which caused the Western powers to impose heavy sanctions on Russia.
As Europe and the US imposed sanctions on Russia, crude oil from the country was available at cheaper rates than other grades. Russia replaced the likes of Iraq and Saudi Arabia as India’s top crude oil supplier.
Shortage of Russian supply
BPCL is currently not getting its full Russian oil supply from the spot markets, the refiner’s head of finance Vetsa Ramakrishna Gupta told Reuters.
He told Reuters:
There may be a shortage of two to three cargoes per month…whatever is the shortage of Russian crude, we are purchasing that from Middle East only.
Recent purchases by BPCL also included oil from Oman, he added.
According to Reuters, Russian oil made up 35%-37% of the crude oil processed by BPCL at three of its refineries across India. These refineries have a combined capacity to process around 706,000 barrels per day of crude, Gupta said.
Diversifying sources
Gupta also told Reuters that if any issues remain with the Russian oil supply next year, the company will explore more options such as Middle Eastern grades or the US West Texas Intermediate crude.
Recently, Russia’s Rosneft had agreed to sell nearly 500,000 barrels per day of oil to Indian private refiner Reliance in the biggest-ever energy deal between the two countries. The agreement is for 10 years, starting in 2025.
This deal is expected to make Russian supply limited to other traders in India as it will account for half of Rosneft’s exports.
According to Gupta said that BPCL has been constantly diversifying its oil sources, and 53% of its supply is through term deals.
The company recently bought Argentinian crude for the first time, and plans to lift 10,000 barrels per day of oil from Qatara under an annual deal, Gupta told Reuters.
Investment plans
According to the report, BPCL plans to invest $19.94 billion in the next five years to 2028-29, with half of that through debt funding.
The company has also taken loans worth 320 billion rupees from Indian banks to expand its Bina refinery.
He further added that BPCL will refinance 40-50 billion rupees in loans next year, and would go for external borrowing in 2026-27.
Gupta said the US Federal Reserve needed to cut interest rates further to make foreign borrowing appealing.
The company has foreign debt of $2 billion, according to the report.
BPCL will invest 250 billion rupees for the development of its oil and gas projects in Mozambique and Brazil in the next five years, Gupta said.
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