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* An all-time favorite among China's private refiners, seaborne Russian ESPO Blend crude oil is starting to attract buyers in India, a trend that could intensify competition between two of Asia's top oil importers.

* Although Indian refiners have remained tight-lipped about their recent ESPO deals, talk of multiple import deals being sealed by both private and state-run refiners in the country has already lifted premiums for the grade.

* "Indian refiners' purchases of ESPO grade have increased substantially recently," said Sumit Ritolia, Senior South Asia Oil Analyst at S&P Global Commodity Insights.

* Russian Urals, a medium API sour crude, is the main grade that India normally imports from Russia to replace medium-to-high API and sour grades from the Middle East and low sulfur grades from Western Africa.

* "India's renewed buying of ESPO, which is low sulfur, is largely attributed to balancing the refinery crude mix to maintain high refinery throughput and manage the intermediate stocks and ullage positions so that refinery throughput doesn't get affected," Ritolia said.

* Trade sources said interest from India for ESPO has started to increase in recent weeks after a few trial cargo purchases in 2022, but it was too early to discern it was a long-term trend until shipment challenges and relatively higher freight costs were addressed.

Price impact visible

* Cash differentials of ESPO Blend have soared in recent days following talk of fresh buying from refiners in India, as well as strong interest from China.

* Indian refiners are believed to have collectively bought seven Russian ESPO Blend cargoes for April loading, according to trade sources and Kpler shipping data.

* While some sources attributed India's buying of ESPO to the disruption in trade flows of Urals crude, others said the recent rebound in the medium sour crude complex might have also spurred refiners to seek alternative Russian grades.

* ESPO crude is primarily shipped from Kozmino in Aframaxes carrying around 100,000 mt each. Russia has been consistently exporting more than 3 million mt/month of ESPO crude from Kozmino, with shipments in January climbing close to 4 million mt, according to shipping industry estimates.

* Prior to Russia's invasion of Ukraine, Aframax freight from Kozmino to North China was less than $500,000; it has since jumped fourfold to more than $2 million and is set to rise further, one freight broker said.

* Platts assessed Aframax freight on the Kozmino-North China route at $2.1 million March 6, compared with $470,000 in the week before the Ukraine invasion in February 2022, S&P Global data showed. A trade source estimated the lumpsum rate from Kozmino to east coast India at $4 million and to west coast India at $4.5 million.

China demand robust

* While India is a new buyer of ESPO crude, fresh demand from China is already making a bigger impact on ESPO premiums.

* State-run Unipec is believed to have recently bought at least four ESPO cargoes for April, and Hengli Petrochemical, which had not bought any ESPO cargoes in the past few years after commissioning, was also heard to have bought around four to five ESPO cargoes.

* Robust demand has seen offers for April-delivery ESPO to China's independent teapot refiners in Shandong at discounts of around $7-$7.50/b against June ICE Brent futures on a DES basis, sources said. This was up sharply from the last trade heard for April delivery at June ICE Brent futures minus $8.50/b, DES Shandong, by an independent refiner.

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