India, a major buyer of Russian oil after EU sanctions, faces disruptions to over a third of its energy imports. Credit: T. Schneider/Shutterstock.

Bharat Petroleum Corporation (BPCL) is reportedly shifting its focus to Middle Eastern crude oil to address a shortfall from Russian suppliers, reported Reuters, citing BPCL head of finance Vetsa Ramakrishna Gupta.

Indian state refiners, traditionally reliant on the spot market for Russian crude, are currently facing a supply gap of approximately eight to ten million barrels for January loading, as earlier sources indicated this month.

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India, a prominent buyer of Russian seaborne oil post-European Union sanctions against Moscow due to the Ukraine conflict, now finds over one-third of its energy imports affected.

BPCL, specifically, has not received its expected Russian oil volume from the spot market, according to a statement by the company on 26 December.

Gupta added: “There may be a shortage of two to three cargoes per month … whatever is the shortage of Russian crude, we are purchasing that from Middle East only.”

Russian oil, which constitutes about 35% to 37% of the crude processed by BPCL’s three refineries with a combined capacity of 706,000 barrels per day, is experiencing a decline in exports.

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This is due to increased domestic demand in Russia and obligations to adhere to production quotas set by the organisation of the Petroleum Exporting Countries (OPEC).

“Next year if there is any major impact on Russian supplies, we will explore more sources including WTI (West Texas Intermediate) crude or Middle Eastern crudes, whichever is cheaper”, Gupta said.

The situation is exacerbated by Russian state oil firm Rosneft’s ten-year contract with Indian private refiner Reliance, commencing in 2025, to supply 500,000 barrels per day, which could account for half of Rosneft’s exports and constrict supplies for other buyers.

In response, BPCL is expanding its supplier base, having recently procured Argentinian crude for the first time.

The company secures around 53% of its oil through term agreements and plans to include 10,000 barrels per day from Qatar in the fiscal year 2025/26 while maintaining existing term contracts.

BPCL has outlined an investment strategy of 1.7tn rupees ($19.94bn) over the five years to 2028/29, with half expected to be funded through debt.