Helsinki, Finland-based Centre for Research on Energy and Clean Air or CREA, came out with a report earlier this month stating that five countries, including India, were “laundromats” for Russian oil. Why did it say so?
CREA claims that 5 countries – India, China, Turkey, the UAE and Singapore – were ‘laundering’ Russian crude and calls them ‘laundromats’ for being conduits for oil from Russia to eventually reach the G7 and other European nations.
Countries that have imposed sanctions on purchases of Russian crude oil at prices greater than $60 per barrel include the G7, European Union, Australia and Japan. The sanctions include unavailability of insurance for crude in transit, and of tankers from countries that imposed these sanctions. These countries are referred to as the price-cap coalition countries.
In its report, CREA also named a couple of ports in India that contributed the largest quantum of import of Russian crude as well as of the export of refined petro products to Europe – the Sikka and Vadinar ports.
Sikka services Reliance Industries’ Jamnagar refinery. It not only imports the highest quantum of seaborne Russian – or Urals crude – but also exports the maximum refined petroleum products to Europe.
In a report summary, CREA said that €2.7 bln of petroleum products have been exported from Sikka to price-cap coalition countries from December 2022 to February 2023.
The Vadinar port is also in CREA’s crosshairs as Russian oil giant Rosneft is a joint venture partner in Nayara’s Vadinar refinery. CREA claims that this port is of great value to Rosneft as a Russian JV in a third-party country offers a possible way to circumvent the sanctions.
How much is too much?
From India’s point of view, is its increasing reliance on Russian supplies a risk in the long-term?A recent opinion article in our sister publication BusinessLine, quoted Anas Alhajji, energy expert and managing partner, Energy Outlook Advisors as saying: “As long as India is being opportunistic, there is no problem increasing dependence on Russia oil while stitching long-term contracts with other suppliers.”
But, from an energy security point of view, the current situation is not sustainable and might backfire, he warned.
“India cannot afford to offend its historic and long-term suppliers. That is why imports from the Gulf have remained steady while imports from the US and Africa declined substantially,” he said. “To avoid future problems, public banks with large foreign presence would shy away for processing payments for cargoes sold above the price cap to avoid in retaliation from the US and the EU.”
Also, there are technical constraints when it comes to refining crude of the Urals grade that we get from Russia. So the maximum India could hope to have of Russian crude is about 40-45% of the total. For details refer to this URL.
Script and presentation: K. Bharat Kumar
Production: Shibu Narayan
Videography: Johan Sathyadas
Published - May 10, 2023 08:32 pm IST
