In the rapidly changing landscape of national energy markets, news has emerged that Reliance Industries Ltd and oil Public Sector Undertakings (PSUs) presently do not hold an agreement with any crude oil supplier for making purchases in Indian currency. The import and purchase of crude oil are key components in the operation of these organisations, and the lack of an existing agreement could introduce new elements into the dynamic of the Indian oil and gas industry.
1. Reliance Industries Ltd and oil Public Sector Undertakings (PSUs) do not currently have an agreement with any crude oil supplier to make purchases in Indian currency.
2. The import and purchase of crude oil are key components to the operation of these organizations, and a lack of an agreement could alter the dynamics of the Indian oil and gas industry.
3. The absence of an agreement has restricted financial flexibility for entities such as Reliance Industries Ltd and oil PSUs.
4. These companies are obliged to convert the Indian Rupee to US Dollars, incurring additional transaction costs and a higher exchange rate risk which could adversely impact profitability.
5. The situation demands a solution to reduce the companies' exposure to global oil price volatility and fluctuating exchange rates.
As of 2019, India's Reliance Industries and oil PSUs, which are heavily reliant on crude oil imports, have no agreements in place for purchases in Indian currency with any crude oil supplier.
An agreement for crude oil supply in Indian currency has hence been absent among major players like Reliance Industries Ltd and oil PSUs, curbing their financial flexibility to some extent. This presents a distinct challenge considering the fluctuating international oil prices and foreign exchange rates. With the existing system, these companies are compelled to convert the Indian Rupee to US Dollars - incurring not just additional transactional costs, but also higher exchange rate risk, which might affect their profitability adversely. The issue calls for a solution that aims at reducing their exposure to such volatility in global oil prices and exchange rates.