India buys more Russian Arctic crude as demand rises

India has diversified its purchases of Russian crude to include Arctic grade Varandey Blend for the first time, as it further increases its dependence on Russian oil.

India received 1.82mn bl (59,000 b/d) of light sour Varandey Blend from the Barents Sea port of Murmansk in December 2022, Vortexa data show. This is the first time India has ever imported this grade, which is produced by Russian firm Lukoil, according to Vortexa.

Imports of Varandey Blend are on course to almost double this month, with 114,000 b/d to arrive in January, a 93pc increase against December.

Around 867,000 b/d of Russian crude and condensate is scheduled to arrive at Indian ports in January, according to Vortexa. This means Varandey Blend could account for around 13pc of total Russian imports this month against zero in November.

India has been buying other Arctic crude grades from Russia, taking 12.1mn bl of Arco and 3.6mn bl of Novy Port Light between late April and the end of December 2022, or equivalent to around 64,000 b/d over the period.

December's Varandey Blend imports were delivered on two Suezmax vessels at Kochi and Vadinar ports.

Vadinar port, in west India's Gujarat state, received 923,531 bl at state-controlled IOC's single buoy mooring system, which pumps oil to IOC's Mathura refinery in north India's Uttar Pradesh state. Kochi received 896,629 bl of Varandey Blend at state-controlled Bharat Petroleum's single point mooring facility, Vortexa data show.

Four Varandey Blend cargoes are scheduled for January delivery. Vishakhapatnam port in the south India's Andhra Pradesh state, where state-run Hindustan Petroleum operates a 166,000 b/d refinery, is scheduled to receive 925,555 bl on 9 January. Another 748,892 bl of Varandey Blend is scheduled to be delivered on 10 January to Vadinar port, where Russian-owned Nayara Energy operates a 400,000 b/d refinery.

Paradip port in east India's Odisha state of is due to receive 925,518 bl on 16 January. IOC operates a 300,000 b/d refinery at Paradip. Mumbai port in west India will take delivery of 923,531 bl on 27 January.

The actual owners of the January delivery cargoes are unclear.

The sharp increase in purchases of Arctic crude by Indian refiners indicates continued appetite for discounted crude to help meet sustained domestic demand for gasoline. Russia's Arctic grades have been diverted from traditional buyers in Europe because of the price caps placed by the EU, G7 and Australia on Russian crude exports.

India's total imports of Russian crude, excluding CPC blend of Kazakh origin, rose to an all-time high of 1.19mn b/d in December. Imports remained above 1mn b/d for the seventh straight month, aided by discounts offered by Russian producers in the wake of Europe's reduced imports of Russian oil.

By Chiranjivi Chakraborty