Private refiners from India profiting from Cheap Russian Crude

India’s private refiners are tapping cheap Russian crude and getting profits from exports. However, on the other hand, the state refiners are getting squeezed by high oil costs and government-capped domestic fuel prices.

When many Western buyers are avoiding Russian crude in response to its invasion of Ukraine, Indian private refiners such as Reliance and Nayara have been among the biggest buyers this year of discounted Russian supplies.

They are reaping major profits by reducing domestic sales and aggressively boost fuel exports, including to buyers in Europe, which is now boycotting imports of Russian energy.

According to the Industry sources the state refiners are much smaller buyers of Russian crude as they largely buy oil under annual term supply deals. They face potential losses in the June quarter, as they grapple with rising global crude costs and controlled retail fuel prices that are unchanged since early April to rein in spiraling inflation.

India has bought about 62.5 million barrels of Russian oil since Moscow’s invasion of Ukraine on Feb. 24 – more than three times more than in the same period in 2021 – more than half for private refiners Reliance Industries and Nayara Energy, Refinitiv Eikon data shows.

according to data firm Kpler, the private refiners in India have helped drive total Indian fuel exports 15% higher in the first five months of 2022 compared to the same period in 2021,

To accommodate sharply higher fuel exports, private refiners have reduced their market share of domestic fuel sales to 7% in April from 10% in the fiscal year to March 2022.

State refiners however have stepped up domestic sales, but are incurring losses of more than 20 rupees per liter on sale of diesel and 17 rupees a liter on gasoline.