India-Russia oil trade: Why India is doubling down on move to procure crude oil from Russia

  • This comes at a time when European companies are avoiding purchases of Russian oil because of problems associated with the wide-ranging sanctions. Russian oil exports to India, the third largest energy consumer, quadrupled in March

Livemint
First Published20 Mar 2022
India's import of crude oil from Russia stood at around an average of nearly 360,000 barrels a day in the first half of this month.
India’s import of crude oil from Russia stood at around an average of nearly 360,000 barrels a day in the first half of this month.

In the wake of rising global fuel prices since the beginning of the conflict in Ukraine adding to India's challenges, India has welcomed competitive offers from all energy producers, including Russia.

With the pressure for competitive sourcing naturally increasing, the people said on conditions of anonymity while explaining the government’s decision to opt for cheaper energy from sources such as Russia. Russia has offered crude oil and other commodities at discounted rates to India after the US and its allies imposed sanctions on Moscow following President Vladimir Putin’s decision to invade Ukraine last month, as per the Hindustan Times report.

According to commodities data and analytics firm Kpler, India's import of crude oil from Russia in March this year so far is nearly four times higher when compared with the corresponding period of last year. India's import of crude oil from Russia stood at around an average of nearly 360,000 barrels a day in the first half of this month. As per the current shipment schedules, the average oil trade between the two countries is estimated to be around 203,000 barrels per day, news agency ANI reported.

This comes at a time when European companies are avoiding purchases of Russian oil because of problems associated with the wide-ranging sanctions. Russian oil exports to India, the third largest energy consumer, quadrupled in March, Financial Times reported on Friday. 

“Geopolitical developments have posed significant challenges to our energy security. For obvious reasons, we have had to stop sourcing oil from Iran and Venezuela,” one of the people cited above said, referring to India’s decision to end oil imports from Iran and Venezuela – two of the cheapest sources of energy for New Delhi – because of US sanctions. “India has to keep focusing on competitive energy sources. We welcome such offers from all producers. Indian traders too operate in the global energy markets to explore the best options,” the person said. 

“India’s legitimate energy transactions should not be politicised,” the person added. Energy from alternative sources has often come at a higher cost, and the jump in prices after the Ukraine conflict has added to India’s challenges. “The pressure for competitive sourcing has naturally increased,” the person said.

India is highly dependent on imports for its energy requirements, and almost 85% of the country’s crude oil needs – or five million barrels a day – is imported, according to Hindustan Times report. Most of these imports are from West Asia, with Iraq accounting for 23%, Saudi Arabia 18% and the United Arab Emirates 11%. 

Additionally, the people noted that Russia has so far been only a “marginal supplier” of crude oil to India, accounting for less than 1% of the country’s requirements and not figuring among the top 10 sources. There is also no government-to-government arrangement for energy imports, the people pointed out.

At a time when the United States (US) and its Western partners have stepped up pressure on India to take a stronger stance on the Ukraine crisis, the people pointed out that Russian oil and gas is being procured by countries across the world, particularly those in Europe. Almost 75% of Russia’s total natural gas exports are to European states that are members of the Organisation for Economic Cooperation and Development (OECD), such as Germany, Italy and France. 

(With inputs from agencies)

 

 

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