Here’s a summary of the key takeaways from the article:
* Reliance Industries is halting Russian crude oil purchases: This is a response to new U.S. sanctions on Russian oil companies Rosneft and Lukoil, aimed at limiting Russia’s ability to finance the war in Ukraine.
* Reliance was a major buyer: Reliance significantly increased its purchases of Russian crude, going from less than 3% of its total imports to one-third in the past year. In september, they bought around 629,590 barrels per day from Rosneft and Lukoil.
* Financial Impact: Halting these purchases is expected to negatively impact Reliance’s profitability, as Russian crude made up over 50% of their crude supply. While option sources are available (West Asia, Brazil, Guyana), they likely won’t be as cheap due to Reliance’s long-term deals with Rosneft.
* Long-Term Deal at Risk: Reliance had a 10-year deal with Rosneft to import $12-13 billion worth of crude annually (roughly 500,000 barrels per day).
* “Opportunistic Buying”: Experts characterize the increased purchases of Russian oil by Indian refiners as taking advantage of discounted prices.
* India’s Role in Russian Exports: India is a major consumer of Russian crude, buying 38% of Russia’s crude exports in September (second only to China at 47%).
* Transition Challenges: While Indian refineries can switch to other sources, there might potentially be short-term difficulties in securing replacement barrels, especially given the volume of the Reliance-Rosneft deal.
In essence, the article details how U.S. sanctions are forcing a major shift in Reliance Industries’ oil sourcing strategy, with potential financial consequences, but also highlighting India’s ability to adapt and find alternative suppliers.
