Lavrov arrives on 2-day visit: Russia oil at $35 less than pre-war rate

India also gets offer of rupee-ruble-denominated payments

Russian Foreign Minister Sergey Lavrov arrived in India on Thursday on a two-day official visit even as the country offered India steep discounts on the direct sale of oil as mounting international pressure lowered the appetite for its barrels elsewhere following the invasion of Ukraine. 

Russia is offering its flagship Urals grade to India at discounts of as much as $35 a barrel on prices before the war to lure India to lift more shipments, the people said, asking not to be identified. 

Headline Brent prices have risen about $10 since then, implying an even larger reduction from current prices.

Russia wants India to take 15 million barrels contracted for this year just to begin with, they said, adding that the talks are taking place at government level. 

India, Asia’s No. 2 oil importer, is among a handful of nations that have been doubling down on Russian crude, defying international pressure and sanctions. Russian barrels have been flowing to Asia in greater volumes as buyers across Europe and the US shun the supply following the invasion of Ukraine. India and China have been the key buyers.

Russia has also offered rupee-ruble-denominated payments using Russia’s messaging system SPFS, that could make trading more attractive for India, they said. No final decision has been taken and the matter is likely to be discussed when Russian Foreign Minister Sergei Lavrov arrives in India for a two-day visit Thursday. 

The direct purchase is expected to involve Russia’s Rosneft PJSC and the Asian nation’s biggest processor Indian Oil Corp., which have an optional term contract — that’s rarely used — for close to 15 million barrels a year. It’s not clear what the upper end of the buying might be, but India is thought to have limited appetite for the grades being offered. 

“India’s intake of Russian oil has been very small for many, many years,” said Vandana Hari, founder of oil market analysis provider Vanda Insights in Singapore. “So the refineries are not configured to buy a lot of Russian oil.”

Representatives for Indian Oil didn’t immediately reply to calls seeking comment and India’s Oil Ministry declined to comment.

Meanwhile, Lavrov’s visit was his first trip to India since Moscow launched its invasion of Ukraine last month. 

Russian Foreign Ministry spokeswoman Maria Zakharova said Lavrov will meet Prime Minister Narendra Modi and Foreign Minister S Jaishankar on Friday. 

A media advisory on Lavrov’s visit issued by the Ministry of External Affairs has not mentioned any meeting between the Russian foreign minister and the prime minister. 

People familiar with the preparations for the talks said India is also likely to press for ensuring timely delivery of various military hardware as well as components of the S-400 missile systems by Russia. 

The Russian foreign minister arrived in India after concluding a two-day visit to China. 

His visit to India coincides with that of US Deputy National Security Adviser Daleep Singh and British Foreign Secretary Liz Truss.

Last week, Chinese Foreign Minister Wang Yi visited India. EU Special Envoy for the Indo-Pacific Gabriele Visentin visited New Delhi this week.

Unlike many other leading powers, India has not yet criticised Russia for its invasion of Ukraine and it abstained from the votes at the UN platforms in condemning the Russian aggression.

However, last Thursday, India abstained on a resolution pushed by Russia on the humanitarian crisis in Ukraine, which was seen as reflective of its neutral position on the conflict.