Indian Oil Firms to Expend $600 Million to Buy Russian Oil

According to officials, Indian oil companies are considering using nearly $600 million in dividend income stranded in Russia to purchase oil from that country.

Indian Oil Corporation (IOC), a unit of Bharat Petroleum Corporation Ltd, Oil India Ltd, and ONGC Videsh Ltd, India's top four oil companies, have been unable to repatriate dividend income from their investments in Russian oil and gas fields. That money is in their Russian bank accounts but cannot be transferred to India due to tough Western sanctions imposed in response to Moscow's invasion of Ukraine.

This comes at a time when Russia has emerged as India's top crude oil supplier, accounting for more than a third of all overseas purchases made by New Delhi.

One option, according to officials, could be to lend the money in Russian bank accounts to entities buying oil. These entities may be able to repay the loan in India. IOC and BPCL are two companies that buy oil from Russia.

"We are studying the legal and financial implications of such a move," an official stated. "We are aware of the sanctions and do not want to do anything that could lead to a breach."

Indian state oil firms have invested USD 5.46 billion in buying stakes in four different assets in Russia. These include a 49.9 per cent stake in the Vankorneft oil and gas field and another 29.9 per cent in the TAAS-Yuryakh Neftegazodobycha fields. They get dividends on profits made by the operating consortium from selling oil and gas produced from the fields.