HPCL now paying in rouble, dirham for Russian crude oil

Hindustan Petroleum Corp (HPCL) is increasingly switching from the US dollar to dirhams and roubles to pay for Russian oil to avoid trouble arising from the price cap imposed by the G-7, people familiar with the matter told ET. 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 dollars, said one of the persons 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 the 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,” said an official, who declined to be named. The prices are in dollars and they just need to be converted in dirham and rouble during payments, he added.

Except the change in currency, no other significant changes have been made in the payment channel, he said. The Swift payment mechanism remains 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 rupees so far.

Other Indian refiners, too, are switching away from the dollar to dirhams and roubles for Russian oil payments, another person familiar with the matter said.

“Crude continues to flow, ” the person cited above said, in reference to rising Russian oil imports. Russia is now the largest crude exporter to India.