Monday 5 December 2022
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EconomyIndia deplores Western pressure to stop importing Russian oil

India deplores Western pressure to stop importing Russian oil

The country is irked by the European duplicity in continuing to buy crude oil from Russia, as none of the sanctions will kick in before the end of 2022

The Government of India is strongly defending its deal with the Russian counterpart to buy 3 million barrels of crude at a discounted price. Reacting to the discomfiture of the US and prominent European Union members due to New Delhi’s decision, official sources speaking on condition of anonymity said “countries with oil self-sufficiency or those importing themselves from Russia cannot credibly advocate restrictive trading”. Government officials in the country also said that the legitimate energy transactions involving India should not be politicised.

The veiled reference to the US follows remarks by the House cautioning India against placing itself on the wrong side of history by buying Russian crude oil — while not long ago the US had said it appreciated the compulsions of India in continuing to trade with Russia. While India does not violate US sanctions with its Russian oil deal, the purchase is still seen as a setback for the US in its efforts to, as a senior US official said recently, close the gap with India on the Ukraine issue.

The development comes ahead of the India-US 2+2 dialogue which, after several misfires, is finally expected to take place in April 2nd week. While the US is trying to persuade India to believe that not the Biden administration’s aloofness from Ukraine but the Modi government’s deal with the Putin regime that will embolden to act more aggressively in the neighbourhood, official sources said geopolitical developments have posed significant challenges to India’s energy security and that ” for obvious reasons” India has had to stop sourcing from Iran and Venezuela despite alternative sources costing a lot more.

India sees the jump in oil prices after the Ukraine conflict as adding to the challenges it’s already facing. “The pressure for competitive sourcing has naturally increased. Notably, recent Western sanctions on Russia have carved outs to avoid impact on energy imports from Russia,” said a source, adding that Russian banks acting as main channels for European Union payments for Russian energy imports have not been excluded from the Swift payment system.

“Russian oil or gas is being procured by various countries across the world, particularly Europe. Seventy-five per cent 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,” said the source. “India has to keep focusing on competitive energy sources. We welcome such offers from all producers. Indian traders too operate in global energy markets to explore best options,” he said.

What seems to have irked the union government is that Russia, unlike in the case of European countries, has been a very minor supplier of crude to India, accounting for less than 1% of its requirement and that there is no government-to-government arrangement for oil import from Russia.

In fact, a hypocritical Europe continues to buy oil from Russia. The EU’s Russian energy imports were worth $ 108 billion (€ 99 bn) in 2021, down from $ 173 billion (€ 157 bn) in 2012. Russia is the EU’s fifth-largest trading partner for exports and third-largest for imports.

Since Russia invaded Ukraine, the US, EU and UK have all announced restrictions on fossil imports from the country. Among the member states, the three largest importers of Russian goods in 2021 were Germany, the Netherlands and Poland. This trio was also the largest exporter of goods to Russia.

The US, EU and UK have all announced that they will curb Russian oil and gas imports in light of the invasion of Ukraine. This includes a plan by the EU to cut its reliance on Russian gas by two-thirds by the end of the year, which means the imports continue in unchanged volumes as of now.

Sources in the Indian government said most of the imports are from the Middle East (Iraq 23%, Saudi Arabia 18%, UAE 11%). The US has also now become an important source for India (7.3%) and imports from the US are expected to increase substantially in the current year, probably by around 11%. “Its market share will be 8%,” said an official, adding that nearly 85% of India’s crude oil requirement (5 million barrels a day) has to be imported.

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