New Delhi: Billionaire Mukesh Ambani’s Reliance Industries Ltd, India’s biggest buyer of discounted Russian oil, plans to scale back imports of Russian crude oil following fresh US sanctions on Moscow-linked firms, sources said.
State-run refiners, however, may continue purchases through intermediary traders for now, industry officials said.
Reliance, which operates the world’s largest single-site oil refining complex at Jamnagar in Gujarat, purchased about half of the 1.7-1.8 million barrels per day of discounted Russian crude shipped to India.
The company refines the crude into petrol, diesel and aviation turbine fuel (ATF), a large share of which is exported to markets such as Europe and the United States at market prices, generating strong margins.
All this may change after US President Donald Trump imposed sanctions on Open Joint Stock Company Rosneft Oil Company (Rosneft) and Lukoil OAO (Lukoil) — Russia’s two largest oil companies that he accuses of helping fund the Kremlin’s “war machine” in Ukraine.
This means that no entity, American or foreign, can have any commercial dealings with the sanctioned Russian companies. Violators face civil or criminal penalties.
Reliance, which has signed a 25-year deal to buy up to 500,000 barrels of crude oil per day (25 million tonnes in a year) with Rosneft, will now reduce and potentially halt all purchases from Russia, three sources with knowledge of the matter said.
The company has huge business interest in the US and cannot risk attracting scrutiny, they said.
Reliance, which bought an estimated USD 35 billion worth of Russian oil since the start of the Ukraine war in February 2022, started “recalibration” of its imports soon after the recent European Union adopted its 18th package of sanctions against Moscow in late July this year.
Recalibration is nothing but moving the import requirement to a different region. And this may get expedited now, sources said.
Transactions involving the two sanctioned Russian firms need to be wound down by November 21.
Reliance did not respond to emails seeking comments.
The other company to be hit hard by the US sanctions is Nayara Energy. The firm, in which Rosneft holds a 49.13 per cent stake, has been entirely reliant on Russian crude supplies since the EU imposed sanctions against it in July.
Nayara did not respond to an email sent for comments.
State-owned oil refiners, however, are not in such dire straits as they do not have any direct contract with Rosneft or Lukoil and had been buying Russian oil through intermediary traders, mostly European (who are out of the sanctions net), sources said. That purchase can continue for now.
The public-sector units are assessing compliance risks, checking every contract to look for Rosneft footprint.
Reliance had in December 2024 signed a term deal with Russia’s Rosneft — now sanctioned — to import as much as 500,000 barrels per day of Russian oil for 25 years. It also buys oil from intermediaries.
Reliance bought about USD 35 billion in oil from Russia since the full-scale invasion of Ukraine in February 2022, accounting for roughly 8 per cent of Moscow’s crude sales over that period.
In 2021, before the Ukraine war, Reliance bought just USD 85 million worth of Russian oil.
The Indian government has maintained that the country’s purchases are not illegal as no sanctions have yet been imposed on Russian crude buys. It has pointed to US officials previously encouraging it to buy Russian crude to stabilise global energy prices.
It has called as “unfair, unjustified and unreasonable” Trump’s decision to double tariffs on Indian goods coming to the US to 50 per cent because of Russian oil purchases. The country’s purchases of Russian oil were “based on market factors,” it has maintained.
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed further sanctions on Open Joint Stock Company Rosneft Oil Company (Rosneft) and Lukoil OAO (Lukoil) — Russia’s two largest oil companies that the Trump administration accuses of helping fund the Kremlin’s “war machine” in Ukraine.
The two companies together export 3.1 million barrels of oil per day. Rosneft alone is responsible for 6 per cent of global and nearly half of all Russian oil production.
India became the largest purchaser of Russian crude since Moscow’s 2022 invasion of Ukraine, capitalising on steep discounts that followed western buyers’ withdrawal.
Russian oil is bought both by private sector firms — Reliance Industries Ltd and Rosneft-backed Nayara Energy — and state-owned refiners Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd, and HPCL-Mittal Energy Ltd (HMEL).
State-owned refiners do not have any term or fixed quantity deal with either Rosneft or Lukoil and typically buy Russian oil through tenders. In these tenders, oil traders, mostly European or ones based in Dubai and Singapore, who had purchased oil from Russian entities, participated.
These traders have not been sanctioned by the US, sources said, adding that European Union sanctions, too, had not targeted these traders.
And even if some traders shy away from picking Russian volumes, Moscow is capable of overnight resurrecting new ones with Dubai registration, sources said, adding that these traders can buy oil from Russian firms and sell to refiners such as those in India and China.
“The measures by the Trump administration are ‘half-hearted’,” a source involved in the business said.
“For months, US President Donald Trump has resisted pressure from US lawmakers to impose energy sanctions and even now the ones who do bulk of the trade are out of its net.”
Another source said the markets are somehow not buying into Trump’s latest sanctions.
“If sanctions were so impregnable, international oil prices would have jumped at least USD 5-10 per barrel on news of such large volumes going out of the market. Instead what we saw was just a USD 2 per barrel increase, implying the market believes not all of the oil that is exported from Russia is going anywhere.”
Nayara Energy, in which Rosneft holds a 49.13 per cent stake, is the other big private sector buyer of Russian oil.
The company, which operates a 20 million tonnes a year oil refinery at Vadinar in Gujarat, has already been sanctioned by the European Union and it may have to recalibrate its purchases, sources said.
Kesani Enterprises Company Ltd — a consortium led by Mareterra and Russian investment group United Capital Partners (UCP) — holds another 49.13 per cent stake in Nayara.
Sources said so far the Indian government has not given any instruction to refiners on stopping or reducing Russian oil imports.
They said Trump’s recent comments on India agreeing to stop all purchases of Russian oil (with no such commitment being made by New Delhi) may have got to do with the European Union (EU) sanctions on import of fuel made from Russian oil.
The EU has banned import of fuels refined from Russian crude with effect from January 21 next year. Reliance, whose one of the two refineries is only-for-export, refines Russian crude into fuels like petrol and diesel, some of which is exported to the EU. MRPL also exports to the EU.
From January, such exports will have to stop and in a way Reliance and MRPL will have to cut Russian oil purchases if they have to continue exporting to the EU, they said, adding that Nayara has already stopped fuel exports to the EU after being sanctioned.
With three big buyers of Russian oil recalibrating their purchases, Russian flows will reduce by January and this is something that Trump may be using as a bargaining chip to beat around his point, they added.
