India, not to mention the US, UK and others in the West, who had expressed reservations about New Delhi’s oil imports from Russia, claimed Friday that the country’s legitimate energy transactions should not be politicized and that countries that are self-sufficient being in oil or importing themselves from Russia cannot credibly argue for restrictive trade.

India must continue to focus on competing energy sources, sources told ET in response to concerns from the US, UK and some other western capitals. “We welcome such offers from all producers. Indian traders are also active in global energy markets to explore the best options,” said a source.

In particular, recent Western sanctions against Russia have made exceptions to avoid the impact on energy imports from Russia. Russian banks which are the main payment channels from the European Union for Russian energy imports are not excluded from SWIFT.

Russian oil/gas is sourced from several countries around the world, especially Europe. 75% of Russia’s total natural gas exports go to OECD Europe (such as Germany, Italy, France). European countries (such as the Netherlands, Italy, Poland, Finland, Lithuania, Romania) are also major importers of Russian crude oil. Europe has made it clear that it will continue to buy oil and gas from Russia for the time being, with Germany, Europe’s largest economy, even pointing out that any move to stop buying Russian energy will affect its economy.

India is discounted trying to secure oil supplies from Russia amid the current geopolitical flux that has pushed the cost of crude oil up. Indian Oil Corporation bought three million barrels of Russian crude oil, the first transaction since the Russian military action in Ukraine. Hindustan Petroleum Corporation Ltd (HPCL) has also bought two million barrels of Russian crude after the IOC’s move. Both have bought Russian Ural oil through the European trader Vitol. Mangalore Refinery and Petrochemicals (MRPL) also plans to buy a million barrels of the same crude.

India is highly dependent on imports to meet its energy needs. Nearly 85% of India’s crude oil needs (5 million barrels per day) must be imported. Most imports come from Western Asia (Iraq 23%, Saudi Arabia 18%, UAE 11%). The US has now also become a major source of crude oil for India (7.3%). Imports from the US are expected to increase sharply this year, probably by around 11%. The market share will be 8%, according to sources.

Geopolitical developments have presented significant challenges to India’s energy security. India has had to stop sourcing products from Iran and Venezuela and alternative sources have often entailed higher costs. “The jump in oil prices after the conflict in Ukraine has now magnified our challenges. The pressure to source competitively has of course increased,” said a source.

While India has major investments in the Russian energy sector, Russia itself has been a marginal supplier of crude oil to India (less than 1% of our needs, not in the top 10 sources). There is no G2G regulation of imports.

The United States said on Tuesday that India would not violate US sanctions by buying Russian oil at a discount, but added that such a move would put the world’s largest democracy on the “wrong side of history”.

MEA spokesman Arindam Bagchi said on Thursday that it is “always exploring opportunities” in global energy markets as its oil needs are met through imports.

Last Friday, India and Russia held a detailed dialogue about current and potential joint projects in the fuel and energy industry and possible mechanisms for transactions. This was discussed during a telephone conversation between Russian Deputy Prime Minister Alexander Novak and Minister of Petroleum and Natural Gas and Minister of Housing and Urban Affairs Hardeep Singh Puri.

One may recall that Puri visited Vladivostok for the 2021 edition of the Eastern Economic Forum. Energy emerges as an important pillar of Indo-Russian ties post-defense. India’s cumulative investment in oil and gas projects in Russia exceeds $15 billion. It is the largest destination of Indian overseas investment in the oil and gas sector. In 2020, Indian Oil Corporation had signed a deal with Rosneft for the annual purchase of 2 million tons of crude oil. This was the first-ever annual oil purchase agreement between the two countries. Russian oil giant Rosneft and its partner bought Essar Oil, renamed Nayara Energy, in 2017 for $12.9 billion. Gazprom has shipped LNG to India under a 20-year contract.

This post Russian oil: Countries that are oil self-sufficient or that import Russian oil cannot credibly argue for restrictive trade: India

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