HPCL, which has used 2 million tonnes of Russian crude of the total 17 million tonnes processed this fiscal year, is shifting to the currencies of the UAE and Russia following foreign banks’ refusal to process payments in dollar, said the person cited above. He didn’t want to be named. HPCL hasn’t used Indian rupee for buying Russian oil as yet.
Foreign banks located in countries that have imposed price cap would want to know the price at which Russian oil deals have been struck to ensure that those are below the cap, the person said. “Why should we declare that to them especially since we buy on a delivered basis,” he said.
The prices are in dollars and they just need to be converted in dirham and rouble at the time of payment, he added.
Except the change in currency, no other significant changes have been made in the payment channel, he said. The Swift payment mechanism remain unhindered, he added.
India has also put in place a rupee payment mechanism but refiners are unable to use it primarily because of a major trade imbalance between India and Russia. Russia hasn’t been keen on receiving payments in rupee so far.
Other Indian refiners too are switching away from dollar to dirham and rouble for Russian oil payments, another person familiar with the matter said.G-7 countries had imposed a price cap of $60 per barrel on Russian crude on December 5 with a grace period of 45 days. Financiers, traders and insurers are barred from supporting any Russian oil deal struck above the cap.
“Crude continues to flow, ” the person cited above said in reference to rising Russia oil imports. Russia is now the largest crude exporter to India, making up 28 percent of country’s total imports in January, up from less than 1 percent in 2021.
Refineries are taking more and more Russian crude as it’s available at a discount but are constrained by their own ability to process it. Refineries’ design permit specific crude diet.