Russia Opens Up New Oil Front: India

Rosneft plans sending deliveries to India’s second largest oil refinery

Russia is opening a new front in its battle for a bigger share of the global oil market: India.

Later this year, Russian state-controlled oil giant OAO Rosneft plans to start sending its first regular deliveries of crude to India’s second largest oil refinery. That follows Rosneft’s decision to buy a big stake in India’s Essar Oil, which owns the refinery and a network of around 2,000 gas stations. The purchase is set to be completed this year.

The deal gives Russia a small, but strategic, beachhead in what is becoming one of the most important crude-oil markets in the world. Saudi Arabia currently dominates the India market, supplying about a fifth of India’s imports, according to data from consultancy FGE. But the kingdom faces growing competition from Russia and Iran as they and other big producers, including Iraq and Kuwait, duke it out for customers amid today’s low prices.

The world’s biggest oil producers have jostled to out-pump and underprice each other to lure customers in markets around the world. The competition has contributed to a dramatic drop in the price of crude over nearly two years, triggered in part by rising U.S. output.