Reliance Industries Ltd, in partnership with BP, is looking to secure a premium for the crude oil it produces from the eastern offshore KG-D6 block, as it prepares for the sale of the oil over the next several years. The company has issued a tender seeking bids from domestic refiners for the monthly sale of its crude production, starting in April 2025 and continuing through to February 2026.

In the tender, Reliance is requesting that refiners pay a premium over the international benchmark for the crude oil produced at the KG-D6 block, one of India’s most significant oil and gas fields. The firm is aiming for a premium that is significantly above the general market rate for similar grades of crude oil. The oil will be priced based on a daily average of Nigerian Bonny Light, a widely recognized benchmark for light, sweet crude, with an additional quality premium attached. Bidders will be asked to quote a premium over this price.

This move by Reliance highlights the strategic importance of the KG-D6 block, which has seen significant output growth in recent years. The field, once thought to be in decline, has witnessed a resurgence, largely due to successful technological advancements and enhanced exploration efforts by Reliance and BP. The oil produced from this block is considered high-quality, light crude, which is in high demand among refineries globally due to its low sulphur content and ease of processing.

As global oil markets remain volatile, the timing of this tender is significant. With geopolitical tensions, fluctuations in demand, and the ongoing energy transition, the global oil market is seeing greater uncertainty. The premiums requested by Reliance reflect the strategic positioning of Indian companies in an increasingly competitive global market. India, as one of the largest oil consumers in the world, is both a major importer and a growing producer of oil. Companies like Reliance are keen to leverage their domestic production for export opportunities, especially as global markets adjust to the evolving energy landscape.

Domestic refiners are expected to assess the price premium carefully in light of current market conditions. The price of crude oil has seen fluctuations throughout 2023 and 2024, driven by changes in supply and demand dynamics, as well as shifts in global economic conditions. These refiners must weigh the premium over the benchmark crude against their refining capacity and market conditions, which could vary significantly over the coming years.

Reliance's focus on securing a premium for its KG-D6 oil production reflects its growing role as a key player in the global energy market, positioning its crude as a desirable product. The company’s strategic approach aims not only to secure competitive pricing for its oil but also to reinforce its role in India’s energy future.