Nations with oil self-sufficiency or those importing Russian oil cannot credibly advocate restrictive trading: India

India has to keep focusing on competitive energy sources, sources told ET in response to reservations expressed by the USA, UK and some other Western capitals. “We welcome such offers from all producers. Indian traders too operate in global energy markets to explore best options,” a source pointed out.

Notably, recent Western sanctions on Russia have carve outs to avoid impact on energy imports from Russia. Russian banks that are the main channels for European Union payments for Russian energy imports have not been excluded from SWIFT.

Russian oil / gas is being procured by various countries across the world, particularly Europe. 75% of Russia’s total natural gas exports is to OECD Europe (like Germany, Italy, France). European countries (like Netherlands, Italy, Poland, Finland, Lithuania, Romania) are also large importers of Russian crude oil. Europe has made it clear that it will continue to purchase oil and gas from Russia for the time being with Europe’s biggest economy Germany even pointing out that any move to stop purchase of Russian energy will impact its economy.

India is trying to secure oil supplies from Russia at a discount amid the current geopolitical flux which has raised cost of crude. Indian Oil Corporation purchased three million barrels of Russian crude oil, the first such transaction since Russian military action in Ukraine. Hindustan Petroleum Corporation Ltd (HPCL) has also bought two million barrels of Russian crude after the move by the IOC. Both have bought Russian Urals crude through European trader Vitol. Mangalore Refinery and Petrochemicals (MRPL) also plans to buy one million barrels of the same crude.

India is highly dependent on imports for meeting its energy requirements. Nearly 85% of India’s crude oil requirement (5 million barrels a day) has to be imported. Most of the imports are from West Asia (Iraq 23%, Saudi Arabia 18%, UAE 11%). USA has also now become an important crude oil source for India (7.3%). Imports from the US are expected to increase substantially in the current year, probably by around 11%. Its market share will be 8%, sources said.

Geopolitical developments have posed significant challenges to India’s energy security. India have had to stop sourcing from Iran and Venezuela and alternative sources have often come at a higher cost. “The jump in oil prices after the Ukraine conflict has now added to our challenges. The pressure for competitive sourcing has naturally increased,” a source pointed out.

While India has major investments in the Russian energy sector, Russia per se has been a marginal supplier of crude oil to India (less than 1% of our requirement, not among top 10 sources). There is no G2G arrangement of import.

The United States on Tuesday said India would not be violating US sanctions by purchasing discounted Russian oil but added that such a move would put the world’s largest democracy on the “wrong side of history”.

MEA spokesperson Arindam Bagchi on Thursday stated that it is “always exploring possibilities” in global energy markets as its oil requirements are met by imports.

Last Friday India and Russia held detailed dialogue on current and potential joint projects in the fuel and energy industry and probable mechanisms for transactions. This was discussed during a phone call between Russian Deputy PM Alexander Novak and Minister of Petroleum and Natural Gas and Minister of Housing and Urban Affairs Hardeep Singh Puri.

It may be recalled that Puri visited Vladivostok for the 2021 edition of the Eastern Economic Forum. Energy is emerging as a major pillar of Indo-Russian ties after defence. India’s cumulative investment in oil and gas projects in Russia exceeds $ 15 billion. It is the single 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 tonnes of crude oil. This was the first-ever annual oil purchase deal between the two countries. Russian oil giant Rosneft and its partner in 2017 bought Essar Oil, renamed Nayara Energy, for $ 12.9 billion. Gazprom has been shipping LNG to India under a 20-year contract.