India has no problem in making payment for Russian oil: Hardeep Puri

There is no payment problem for Russian crude, Petroleum and Natural Gas Minister Hardeep Singh Puri said on Wednesday.

He said there is no proposal to cut retail fuel prices at the moment.

Addressing a press conference, the minister said India enjoys a buyers’ position and foreign suppliers are approaching Indian companies with offers to sell oil.

“I have not received any inputs from our companies regarding supplies stopping due to payment problems,” he said.

Instead, imports from Russia currently stand at 1.5 million barrels per day, he added.

India buys the majority of Russian oil in UAE dirhams.

Media reports had flagged falling volumes of crude from Russia in recent months, possibly due to problems in settling payments with suppliers. Puri said any fall in incoming crude volumes is a function of oil prices.

Russia remained the single-largest supplier of crude oil for the 15th straight month as of December, estimates made by London-based commodity data analytics provider Vortexa show.

Russia’s share was 0.2 per cent in India’s total oil imports during February 2022 but the figure surged to 40 per cent in February 2023.

While the share of crude oil originating in Russia reduced during recent months, the continuing discounts on Russian crude have helped stabilise volumes.

People in the know said discounts have hovered between $9 and $11 per barrel in November, up from $8-$10 per barrel in October.

They were at low levels of $4-$5 per barrel in mid-2023.

No discussions on price cut

Puri also stressed there has been no discussions with oil marketing companies (OMCs) on a potential retail price cut for fuel.

While OMCs have raked in record profits in the first two quarters of the financial year, retail fuel prices have remained unchanged for 20 months now.

Puri said OMCs need to make up for previous losses.

Taking the national capital as an example, petrol and diesel prices last saw a revision back on April 6, 2022, when prices of both petrol and diesel were raised by 80 paise a litre.

Since then, the OMCs have not raised prices throughout the war in Ukraine even after the volatility in crude prices.

OMCs have posted mega profits in the first two quarters of FY24 that have beaten market estimates.

The Indian Oil Corporation’s consolidated net profit was Rs 13,713 crore in Q2 FY24, bouncing back from a loss of Rs 910 crore during the same quarter last year.

For Bharat Petroleum Corporation (BPCL), consolidated net profit touched Rs 8,244 crore in Q2 from a loss of Rs 338 crore in Q2 of the previous financial year.

Both the firms are still facing recovery in diesel.

The minister also said oil flows faced imminent threats from the attacks on maritime trade.

“In the last 10 days, we have had challenges to ship in the Red Sea-Suez Canal area.

"Between 4 and 8 per cent of global liquified natural gas (LNG) cargoes traversed the route in 2023, and 8.2 million barrels per day passes through the region daily.

"If there is a disruption, there will be a major impact. In this situation, our primary responsibility is to ensure availability and affordability,” Puri said.

He said India is navigating the challenge carefully by diversifying the sources of supply, as many suppliers have diverted their routes.

In August, the minister had hinted that OMCs should cut prices by pointing out two successive quarters of growth. However, officials said the situation has changed now.