Asian nations are continuing to import oil from Russia, availing themselves of heavy discounts for volumes spurned by many western customers and in a market impacted by US, UK and EU sanctions in the wake of Moscow’s invasion of Ukraine last month.

Russian crude is available for a discount of around $30 per barrel from the prevailing Brent price, making it only too attractive to some Asian refiners although the transportation time can be three weeks or longer versus seven days from the Middle East.

India’s leading refiner Indian Oil Corporation (IOC) has bought 3 million barrels of Urals crude for May delivery from Vitol, according to Reuters, which is said to be IOC’s second purchase of Urals crude since Russia invaded Ukraine on 24 February.

Compatriot Nayara Energy (formerly Essar Oil) – a private refining company part-owned by Russia’s Rosneft – has bought Russian crude after a hiatus of around one year, with a purchase of some 1.8 million barrels of Urals oil from trader Trafigura.

Meanwhile, India’s state refiner Hindustan Petroleum has bought 2 million barrels of Urals oil for May delivery, said Reuters, referencing trading sources.

Indian media reported multiple bids were received for last week’s tender of two parcels of 700,000 barrels of crude for May delivery from the Sakhalin-1 oil project in Russia, in which ONGC Videsh has a 20% stake. In contrast, a similar tender for a 700,000-barrel parcel of Sakhalin-1 oil held two weeks ago failed to attract any interest, according to the Economic Times.

Bidders this time around are said to have included IOC, Bharat Petroleum, Mangalore Refinery and Hindustan although it is not yet known which refiners were successful.

Against this backdrop, India’s state-run GAIL is continuing to import liquefied natural gas from Russia’s Gazprom.

Indonesia’s national energy company Pertamina too has its eye on the bargain basement-priced Russian oil.

Pertamina president director Nicke Widyawati on Monday told lawmakers that the company is considering purchasing volumes from Russia.

"At the current price amid geopolitical situation, we see an opportunity to buy from Russia at a good price," Nicke said in a hearing with the House of Representatives Commission VI, which oversees trade and state-owned enterprises.

She added Pertamina has already had talks with the Ministry of Foreign Affairs and Bank Indonesia to discuss the purchase of Russian crude.

No problem politically

“There is no problem politically as long as the companies we deal with are not subject to [Western] sanctions," Nicke said.

She also noted that Pertamina would conduct the purchase purely on a business-to-business basis, reported the Jakarta Globe.

Imported Russian crude would be processed at the company’s Balongan refinery in West Java, where a revamp is due to be completed in a couple of months.

The facility was designed to handle low-sulphur crude, typically from the Gulf nations, which can come at a premium price.

"With this revamping… Balongan will be more flexible… to use any type of crude," Nicke said.

Pertamina’s finances typically come under pressure when oil prices are high, and it had capped the prices of some unsubsidised fuels it produces to help cushion the economic fallout of the coronavirus on people’s wallets. The government was supposed to compensate the national oil and gas company for this move. However, Finance Minister Sri Mulyani Indrawati this week admitted that 85.4 trillion rupiah (US$5.9 billion) in compensation payments due to Pertamina for 2020 and 2021 is in arrears.

Indonesia had forecast the oil price to average $63 per barrel in its 2022 state budget but crude hit north of $114 per barrel in March.

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