There is no proposal from Russia or any other country for an arrangement to allow purchase of crude oil in lieu of Indian rupee, Rameswar Teli, Minister of State for Petroleum and Natural Gas, stated on Monday. The state-run oil marketing companies do not have any such contrast at present either, the minister mentioned.

The response came against a question by member of parliament Sujeet Kumar, inquiring whether India is under any contract with any country to purchase crude oil in Rupees instead of Dollars, either partially or wholly.

Kumar also sought details of the crude oil trade where rupee is being used as the mode of transaction, and whether the government is pursuing any such contracts in its negotiations with crude oil suppliers.

“At present, oil public sector undertakings neither have any contract nor is any such proposal under consideration from Russia or any other country for purchase of crude oil in Indian rupees,” Teli told the upper house of the parliament.

India’s crude oil imports from Russia have drawn attention after the latter started a military attack on Ukraine. Along with the supply of crude oil from Russia, the mode of payment has been in focus after the United States and its allies banned Russian banks from Society for Worldwide Interbank Financial Telecommunications (SWIFT) global payment messaging network.

An alternative ruble-rupee payment arrangement is allegedly in the works, but a final decision on the same has not been reached yet.

Meanwhile, the U.S. has agreed that India’s purchase of discounted crude oil from Russia will not be in violation of sanctions against the latter.

Notably, India buys only a meagre portion of its entire crude import basket from Russia. According to an earlier response by petroleum minister Hardeep Singh Puri in the Rajya Sabha, India imported 85% of its crude oil requirements and 54% of its natural gas requirements in FY21, with Iraq, Saudi Arabia, UAE, Nigeria and the U.S. as its major sources.

“Indian oil and gas public sector undertakings had imported approximately less than 1% of their total crude oil import from Russia in the year 2021-2022 (till January). India imported only 0.419 million metric tonnes (MMT) of crude oil from Russia, as compared to overall crude oil imports of 175.90 MMT,” Puri told the parliament.

“In the current situation of high volatility in global energy markets, Government of India is closely monitoring the situation. No adverse impact on hydrocarbon energy agreements is currently foreseen,” he had further said.

As per the Petroleum Planning & Analysis Cell (PPAC) data Puri furnished in the Rajya Sabha, India imported only 0.2% of its crude oil import from Russia till January in the current fiscal. This percentage stood at 0.3% with 0.633 MMT at the end of FY21, 1.3% at 2.937 MMT in FY20, and 0.6% at the end of FY19 with 1.401 MMT.

For liquefied natural gas (LNG), India has imported 0.212 MMT of the fuel from Russia in the first ten months of the current fiscal, constituting 1.1% of the 20.215 MMT total LNG imports during this period. In FY20, only 0.199 MMT, or only 0.8%, out of India’s LNG imports of 25.574 MMT came from Russia. India did not receive any consignments of LNG from Russia in FY21 and FY19, shows PPAC data.

The bigger concern for India at present is the impact of the Russia-Ukraine war on crude oil prices, and not supply from Russia. The benchmark Brent crude oil is trading around $112 per barrel today, coming down slightly from today’s open at $119.90 per barrel.

Crude oil prices have remained close to $100 per barrel since Russia initiated hostilities in Ukraine. In line with this spike, oil companies have started to increase petrol and diesel prices, which were unofficially frozen for four months since November last year during the state assembly elections in five states.

On Monday, petrol and diesel prices were hiked for the sixth time in seven days. After the hike today, a litre of petrol in Delhi costs ₹99.41, whereas diesel is retailing at ₹90.77 per litre in the national capital. In Mumbai, petrol is being sold at ₹114.19 per litre, and diesel at ₹98.50 per litre.

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