New Delhi, May 22 (KNN) The Indian government has made an unusual request to its state-owned oil refiners and the private company Reliance Industries Ltd. to collectively negotiate a long-term supply agreement with Russia, according to sources familiar with the matter.

The proposal calls for the refiners to secure at least one-third of their contracted oil supply from Russia at a fixed discounted rate.

This move aims to insulate the nation's economy from volatile global oil prices, said the sources, who requested anonymity due to the sensitive nature of the talks. The government's appeal for collaboration was informal.

However, Reliance Industries is unlikely to share sensitive commercial information with the state-run refiners, as they are competitors in India's domestic fuel market. This could impede the government's efforts to foster cooperation among the companies.

India has been a major importer of Russian crude oil since the invasion of Ukraine last year. However, stricter enforcement of U.S. sanctions has disrupted trade flows, compelling refiners to purchase more expensive oil from other sources.

The Indian government hopes that by negotiating jointly, rather than competing individually, the state refiners can leverage greater bargaining power during supply negotiations.

Precedents exist for such collaboration, as state refiners have previously engaged in joint negotiations with suppliers from the Middle East and West Africa to secure more favourable terms.

Nevertheless, India's request for a private company like Reliance to participate in these talks is an unconventional approach.

Sources indicate that while the state refiners have sought discounts exceeding USD 5 per barrel relative to the Dated Brent benchmark, Russia has offered a discount of only USD 3 per barrel and has displayed reluctance to reduce prices further.

At one point following the Ukraine conflict, the discount for a particular Russian crude grade had surged above USD 30 per barrel before narrowing.

Indian Oil Corporation is the only state refiner that previously held a long-term supply contract with Russia, which expired in March and has not been renewed due to disagreements over volumes and pricing.

(KNN Bureau)