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India Eyes Oil Deals with Nations Including Russia

Minister of Petroleum and Natural Gas of India Hardeep Singh Puri speaks during the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 16, 2024. REUTERS/Denis Balibouse/File Photo Purchase Licensing Rights
Minister of Petroleum and Natural Gas of India Hardeep Singh Puri speaks during the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 16, 2024. REUTERS/Denis Balibouse/File Photo Purchase Licensing Rights
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India Eyes Oil Deals with Nations Including Russia

Minister of Petroleum and Natural Gas of India Hardeep Singh Puri speaks during the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 16, 2024. REUTERS/Denis Balibouse/File Photo Purchase Licensing Rights
Minister of Petroleum and Natural Gas of India Hardeep Singh Puri speaks during the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 16, 2024. REUTERS/Denis Balibouse/File Photo Purchase Licensing Rights

Indian Oil Minister Hardeep Singh Puri on Tuesday announced that state-run Bharat Petroleum Corp (BPCL.NS), plans to build a new refinery and the nation is looking at signing more oil import deals with countries including Russia at discounted rates.

Puri, who took charge of the ministry for a second time on Tuesday, said Prime Minister Narendra Modi wants to provide energy at affordable rates to customers to cushion them from the volatile oil markets.

India, the world's third biggest oil importer and consumer, emerged as the biggest buyer of Russian sea-borne oil, snapping up barrels sold at a discount as Western companies halted purchases after Moscow's invasion of Ukraine in 2022, Reuters reported.

"We are a longstanding partner of Russian federation. We have had discussion with the Russians on long-term deals," Puri said.

"I am confident that both our private and public sector players will sign long-term deals with countries where they see benefit in doing so," he said, when asked if Indian state-run companies are looking at signing such deals with Russia.

While private refiners Reliance Industries (RELI.NS), and Nayara Energy have signed an annual import deal with Russia, state refiner Indian Oil Corp (IOC.NS), has not yet renewed its deal.

Nayara Energy, majority owned by Russian entities, has also signed an annual crude supply deal with a trader to buy about 8-10 million barrels each month at a discount of $3-3.50 per barrel linked to the Dubai marker in 2024.

Indian state refiners BPCL and Hindustan Petroleum Corp (HPCL.NS), are also looking at signing term deals with Russia.

Puri said the location and capacity of a new refinery planned by BPCL have not yet been finalised.

He said India wants to raise its oil output which has been stagnant for years. State-run Oil and Natural Gas Corp (ONGC.NS), has floated a tender seeking technical tie-ups with global oil majors to boost output its western offshore Mumbai High Field, he said.

Output from the Mumbai High Field has been declining since 2018. Having hit a peak of 471,000 barrels per day (bpd) in 1984-85, it produced an average 134,000 bpd in the fiscal year to March 2024.

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Putin: Russia to Continue Cooperation with OPEC+

Russian President Vladimir Putin speaking at the Russian Energy Week forum in Moscow on Thursday (EPA)
Russian President Vladimir Putin speaking at the Russian Energy Week forum in Moscow on Thursday (EPA)
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Putin: Russia to Continue Cooperation with OPEC+

Russian President Vladimir Putin speaking at the Russian Energy Week forum in Moscow on Thursday (EPA)
Russian President Vladimir Putin speaking at the Russian Energy Week forum in Moscow on Thursday (EPA)

Russian President Vladimir Putin said on Thursday that his country will continue to develop cooperation with the Organization of the Petroleum Exporting Countries (OPEC) and its allies known as OPEC+, as well as members of the Gas Exporting Countries Forum (GECF).

Putin also said Russia is fulfilling its obligations to supply energy resources to the global market.

The Russian President was speaking at the Russian Energy Week before a panel of top ministers from OPEC+ called the Joint Ministerial Monitoring Committee is scheduled to meet on Oct. 2 to review the market and is not expected to make any changes to policy.

Russian Deputy Prime Minister Alexander Novak told Reuters on Thursday that there were no changes to OPEC+ plans to start phasing out oil production cuts from December.

OPEC+, which groups OPEC members and allies such as Russia, is scheduled to raise output by 180,000 barrels per day in December. Iraq and Kazakhstan have pledged to cut 123,000 bpd in September to compensate for earlier pumping above agreed levels.

OPEC+ sources told Reuters on Thursday that the producer group is set to go ahead with a December oil output increase because its impact will be small should a plan for some members to make larger cuts to compensate for overproduction be delivered in September and later months.

Speaking at the Russian Energy Week, Putin said on Thursday, “Russia is fulfilling its obligations to supply energy resources to the global market. It plays a stabilizing role in it, participating in such authoritative formats as OPEC+, and the GECF.”

He added: “And we will certainly continue this cooperation with our partners.”

Putin praised cooperation with the BRICS group of countries, which Moscow sees as a counterbalance to the West, adding that Russia will continue cooperation with the OPEC+ oil producers.

Putin also acknowledged difficulties in payments for Russian energy exports, for which “friendly” counries, which have not introduced sanctions against Russia, account for 90%.

Russian oil and gas sales account for around a third of total state budget revenues and have been crucial for underpinning country's economy, which faces multiple sanctions from the West over the military conflict with Ukraine.

Meanwhile, Russian Deputy Prime Minister Alexander Novak told reporters on the sidelines of Russian Energy Week that all countries participating in the OPEC+ deal are currently in full compliance with their respective obligations, Russian, according to the Interfax news agency.

He said Russia aims to be producing 540 million tons of oil per year by 2050 in the baseline scenario, but this amount might be adjusted depending on the country's obligations within OPEC+.

“Indeed, 540 million tons is the baseline scenario for which we're aiming [for oil output by 2050], but with a caveat taking into account cooperation with our partners in OPEC+. We have no objective to flood the market if it does not require this. But [it also works] the other way, to give the market additional resources if this is required,” Russian Deputy Energy Minister Pavel Sorokin said.

He said Russia is not worried about potential growth of demand in the period to 2030 or the period to 2050.

“In our view, it's fairly substantial. It's at least 5 million-7 million bpd, meaning about 4.5%-5.5% from current consumption to 2030. Subsequently, we're talking about around 5% additional growth to 2050,” Sorokin said.