India to continue buying Russian oil, ministry source says

A view shows oil terminal Kozmino near Nakhodka
A view shows the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

NEW DELHI, Dec 2 (Reuters) - India will continue buying Russian oil and even look for term contracts as sanctions allow purchases provided that Western services are not used, an oil ministry source said on Friday.

The comment comes a day after European Union governments tentatively agreed on a $60 a barrel price cap on Russian seaborne oil, which comes into effect on Dec. 5.

After Dec. 5, Western shipping and insurance companies would be prohibited from handling Russian oil sold above the price cap.

"There is a lot of opacity in term of what the rules of the game are... There are always options to buy Russian oil," the source said, without elaborating.

Indian refiners would continue to lift Russian oil beyond Jan. 19, he added.

Vessels of Russian petroleum that are loaded before Dec. 5 and unloaded at their destination before Jan. 19, will not be subject to the price cap planned by Western governments, the United States said last month. The G7 and the EU plan to impose the price cap as part of sanctions against Russia for its invasion of Ukraine.

While India has emerged as the top buyer of Russian oil behind China as refiners snap up discounted crude shunned by Western nations since the invasion of Ukraine, Moscow has become New Delhi's second biggest oil supplier, replacing Saudi Arabia, after Iraq, data from trade sources show.

Indian refiners, which mostly buy Russian oil on spot basis, would consider signing term deals with Russian oil if pricing terms are favourable for sustained supplies, the oil ministry source said.

He said global oil producers have assured India, the world's third biggest oil consumer and importer, that there will be no supply disruption.

On a gas supply halt under a 22-year deal between India's state-run GAIL (India) Ltd (GAIL.NS) and Germany's Sefe, which comprises former units of Russian gas major Gazprom (GAZP.MM), the official said India would like to amicably resolve the issue with the Russia and Germany.

"(The) focus is to get gas and we are looking at ways of settling the dispute... We are talking to both Germany and Russia to resolve the issue," he said.

Reporting by Nidhi Verma; Editing by David Goodman and Susan Fenton

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