India keen on taking Russian oil on discount but working on nitty-gritties

Keen on increasing oil shipment from Russia and taking advantage of the discounted price being offered by the sanction-hit country, India is working on issues like availability of ships and insurance cover for its imports.

Russia is the second-largest exporter of crude and India is a third-largest importer and consumer, but hit by severe western sanctions, the former is looking for a buyer of its oil.

India shipped 43,400 barrels per day of oil from Russia last year, which is about 1 per cent of its total oil import. State-owned Rosneft is India's largest crude supplier. Russia is offering India oil on huge discount, according to industry sources, who said there were many problems in buying from a sanction-hit country.

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Officials, however, deny that there are any problems in buying oil from Russia at the moment as even Europe is buying. Only the US has stopped, they said.

"Oil on discount is always welcome. That will solve a lot of problems that the pandemic-hit economy is already facing," said an official but added that some issues like availability of tankers and insurance cover have to be sorted out.

"We cannot agree to pay a high insurance premium for our imports. There will be no net gain in that case," the official said.

Another official said the arrangement with banks in Russia and India have to be finalised and also the exchange rate for this oil trade has to be looked into.

"Various issues of importance are still being worked out," the second official said.

India's crude import bill may cross $100 billion in the current financial year from nearly $83 billion last year if oil prices keep rising. For the fiscal year 2022-23, the entire Budget math has been done assuming crude will remain within $75 per barrel. India ia a net importer of crude and ships 86 per cent of its consumption. High oil prices will feed into inflation and force RBI to raise interest rates at a time when pandemic has hit economic growth.

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