Indian Oil pauses Russia oil deal talks, says not related to US sanctions

Business Standard

01-05-2025

Indian Oil Corporation Ltd (IOCL), the country's largest oil refiner and fuel retailer, has paused discussions on a new long-term crude oil supply deal with Russian energy giant Rosneft, citing global geopolitical uncertainties and evolving trade dynamics.
Speaking at a post-results press conference on April 30, IOCL Chairman and Managing Director AS Sahney stated that while the company remains open to a term agreement with Russia, it is not engaged in any active negotiations. When asked, Sahney denied that the decision was related to US sanctions on Russian oil.
India-Russia crude oil trade
Indian state-run refiners—IOCL, BPCL, and HPCL—had increased Russian crude purchases after the Ukraine war and were in talks with Moscow for term deals. The company had a term deal with Russia, which expired in March 2023 and has not been renewed since. It currently sources Russian oil solely on a spot basis.
In March, reports also emerged that Rosneft was exploring an exit from its 49.13 per cent stake in Nayara Energy (formerly Essar Oil) due to challenges in repatriating earnings amid Western sanctions.
Russian oil share in Indian Oil
Russian crude's share in IOCL's overall oil basket has dropped to 22 per cent in FY25, down from 30 per cent in FY24. Sahney clarified that the decline was due to commercial factors and not the US sanctions.
'All the crude that we are buying (from countries) is totally on a commercial basis. It has to meet my requirements, and it has to fit the bill of being commercially viable," Sahney said.
US sanctions on Russian oil
The move comes amid renewed US sanctions targeting Russian oil firms and shipping networks. In January 2024, under then president Joe Biden, the US imposed sanctions on Russian oil majors, including Gazprom Neft and Surgutneftegaz, as well as around 180 oil tankers.
Within the Trump administration, there have been differing views on how to handle sanctions on Russia. US President Donald Trump has indicated a willingness to lift certain sanctions on Russia, including oil, while also considering imposing "secondary sanctions" on countries that continue to purchase Russian oil.
Indian Oil profit skyrockets in Q4, drops in FY25
Meanwhile, IOCL reported a 57.7 per cent year-on-year rise in consolidated net profit for the fourth quarter of FY25, reaching Rs 8,123.64 crore, up from Rs 5,148.87 crore in the same period last year. Sequentially, net profit surged 284 per cent from Rs 2,115.29 crore in Q3.
Despite the strong quarterly performance, annual net profit dropped sharply to Rs 13,597 crore, a 67 per cent decline from Rs 41,729 crore in FY24, due to falling global crude prices. The Q4 profit rise was largely attributed to reduced expenses, which fell to Rs 2.12 trillion from Rs 2.17 trillion in Q4 FY24, and inventory gains, although the company also reported an overall inventory loss of Rs 2,000 crore for the year.