india russian oil import

SBI Has ‘Long Avoided’ Processing Payments for Russian Oil to Stay Clear of US Sanctions: Report

‘It is because SBI has such a major presence in the US. This, despite the fact that bank transfer within the price cap can be made,’ Mint reported.

New Delhi: The State Bank of India (SBI) has “long avoided” processing payments for Russian oil purchased by state-run refiners in order to steer clear of sanctions for violating the price cap imposed by a coalition of Western countries, the Mint newspaper reported.

In December 2022, the US, other G7 countries and Australia imposed a $60-per-barrel price cap on Russian oil in order to punish Russia for its invasion of Ukraine.

Mint reported that the US government has been checking whether Indian banks operating in the country are adhering to the price cap. A source told the newspaper that SBI was avoiding processing payments for Russian oil partly due to its large presence in the US.

“Since the time the OFAC [Office of Foreign Assets Control, an enforcement agency of the US federal government] sanctions have been imposed, SBI has been avoiding making payment transfer to Rosneft [a Russian oil firm] for the purchase of Russian oil,” they told Mint.

“It is because SBI has such a major presence in the US. This, despite the fact that bank transfer within the price cap can be made,” the person continued to say.

SBI has, in the past, also asked state-owned refiners to provide purchasing data in order to mitigate the risk of inadvertently breaching the price cap.

However, according to another source contacted by the newspaper, SBI’s avoidance of processing payments for Russian oil was “not a major issue” for Indian state refiners.

“As we can see, the flow of Russian crude has not stopped. Last year [2023], they constituted a large chunk of our imports. In case of avoidance of payment by SBI, refiners would have so far found alternative ways of payment,” Mint quoted its second source as saying.

Russia has grown to be India’s largest supplier of oil and provided 40% of India’s imports of the product as of the first half of the fiscal year 2023-24, news agency Reuters reported.

This is because India is dependent on oil imports due to lagging domestic output and has sought to take advantage of Western sanctions on Russian oil in a bid to reduce its oil import bill.

But Union oil minister Hardeep Singh Puri said earlier this month that oil imports from Russia had decreased recently due to less attractive prices.

India had paid as much as $84.20 per barrel of Russian oil in October last year, the highest it has paid since the price cap was imposed, Reuters reported.

No Talks With State-Owned Oil Retailers On Reducing Fuel Prices: Union Minister

Petroleum and natural gas minister Hardeep Singh Puri also denied reports of India facing problems paying for Russian oil.

New Delhi: Hardeep Singh Puri, the Union petrol and natural gas minister, told reporters on Wednesday (January 3) that the government had had no discussions with major state-owned oil retailers on reducing fuel prices.

A 17% reduction in the cost of importing crude oil between September and December last year had raised expectations among some of a reduction in fuel prices, the Hindustan Times reported.

When asked about such a reduction, Puri responded that the situation was “highly turbulent” and said there had been no discussions with the retailers on the matter, the Press Trust of India reported.

“I have clarified [that] there has been no discussion with the oil marketing companies on any such issue. And please, we are in a highly turbulent situation,” Puri said.

He continued: “What does turbulent mean? There are two areas on the … global map which are in [a] conflict situation … In the last one week or ten days, we’ve had challenges to shipping,” and referred to challenges specifically in the Red Sea and the Suez Canal.

“God forbid, if there is a further challenge or disruption, do you see the impact that can be caused?”

Shipping routes in the Red Sea have been disrupted since Yemen-based Houthi groups began targeting ships travelling there in response to Israel’s war on Hamas.

Puri said the government was responsible for ensuring “availability and affordability” but added that it did not determine how oil companies priced fuel.

India’s three major state-owned oil retailers – the Indian Oil Corporation Limited, the Bharat Petroleum Corporation Limited and the Hindustan Petroleum Corporation Limited – have kept petrol and diesel prices unchanged since April 2022, HT’s report said.

PTI cited officials as saying that although the three retailers made profits in the first quarter of the ongoing financial year, they are yet to recoup losses they had made earlier.

‘No payment problem’

Puri also denied reports that India was experiencing problems in paying for Russian oil.

“There is no payment problem. I keep telling you, but you guys keep inventing it. It is a pure function of the price at which our refiners will buy [the oil],” he said.

“I’ve never heard our companies say that payment problems have affected our supplies,” Puri also said in Hindi.

“If they [Russia] don’t offer us [a good] discount, why would we buy from them?” he asked according to Reuters.

The news agency had earlier reported citing anonymous sources that the Indian Oil Corporation Limited’s payments to a unit of Russian oil producer Rosneft were being hampered due to currency issues.

India is dependent on oil imports as its domestic oil output lags behind growing demand.

It has purchased oil from Russia at cheaper prices in a bid to cut its oil import bill, taking advantage of discounted prices owing to Western sanctions starting after Russia’s February 2022 invasion of Ukraine.

Russia has grown to be India’s largest supplier of oil and provided up to 40% of India’s imports of the product in the first half of the fiscal year 2023-24, Reuters reported.

India Leads Group of Nations That Buy Cheap Russian Oil, Sell Processed Products to Europe: Report

India shipped the highest volume of oil products among five laundromat nations – including China, Turkey, the UAE, and Singapore – to price cap coalition countries, a year since Russia’s invasion of Ukraine.

New Delhi: India is leading the group of ‘laundromat countries’ that buy discounted crude oil from Russia, refine it, and sell the processed products to European countries, thus sidestepping European sanctions against Russia, a Finland-based group said in its report.

The report, titled Laundromat: How the price cap coalition whitewashes Russian oil in third countries by Finland-based Centre for Research on Energy and Clean Air (CREA), was released on April 19.

The ‘laundromat countries’ are China, India, Turkey, the UAE, and Singapore.

The European Union has imposed massive sanctions against Russia in response to its invasion of Ukraine, which started on February 24, 2022.

As part of the sanctions, the EU cannot import crude oil and refined petroleum products directly from Russia.

India’s latest hack to purchase cheap crude from Russia – thanks to the sanctions that put a price cap of $60 per barrel on Russian oil – and refine and sell it to Europe has made it a significant player in the global oil markets.

According to Reuters, Europe typically imported an average of 1,54,000 barrels per day (bpd) of diesel and jet fuel from India before Russia’s invasion of Ukraine. But that increased to 2,00,000 bpd after the EU banned Russian oil products imports from February 5, the report said, citing Kpler data.

In addition, India’s oil imports from Russia are now higher than the combined imports from Iraq and Saudi Arabia. Russia is now supplying more than one-third of all oil India imported, PTI reported, citing energy tracker Vortex.

The CREA report said that this is a way to circumvent measures that attempt to hinder Russian government revenues used by president Vladimir Putin to fund the war.

India shipped the highest volume of oil products to price cap coalition countries, a year since Russia’s invasion of Ukraine.

It sold 14.8 million tonnes of oil products to these countries, representing a 2.4% increase from the prior year in volume terms, but a 48% rise in value terms. The latter is due to the rise in oil product prices which provides higher profits for refineries exporting refined products, the report said.

UAE, China and Singapore sold 14.2 million tonnes, 7.5 million tonnes and 7.1 million tonnes, respectively, to the price cap coalition
countries, during the same period, it added.

India Under No Pressure To Limit Energy Purchases From Russia: MEA

Indian firms step up imports of oil and coal from the country shunned by some governments for its invasion of Ukraine.

New Delhi: India said on Friday there was no pressure on it from Western countries or anywhere else over its energy purchases from Russia, as Indian firms step up imports of oil and coal from the country shunned by some governments for its invasion of Ukraine.

India, the world’s third-biggest crude importer, overtook China to become the biggest buyer of Russian oil in July based on sea-borne volumes, having bought very little from the country before the start of the war in Ukraine in February.

Also in July, Russia became India’s third-largest coal supplier, up from the sixth position historically, as discounts drove shipments to a record.

The United States has tried to lure India away from its main arms supplier Russia, but New Delhi says its own needs as an emerging country are paramount. India has not condemned the invasion.

“Our decisions on what we do regarding purchase of oil or other things related to that will be guided by our energy security requirements, our perspective will be guided by energy security,” India’s foreign ministry spokesperson Arindam Bagchi told a news conference.

US Treasury Secretary Janet Yellen last month described as “encouraging” talks with India about a proposed price cap on Russian oil that Washington hopes will make it harder for Moscow to fund the war.

Bagchi said he was not aware of any specific proposal on price caps, adding, “I certainly would not be able to agree on the idea that there is pressure on such issues”.

Russia has said it will not supply oil to countries imposing a price cap.

Its central bank said on Friday that the country was considering buying the currencies of “friendly” countries such as China, India and Turkey to hold in its National Wealth Fund.

India has already said trade with Russia is expected to surge in the next two months, after India’s central bank allowed importers and exporters to pay in the partially convertible rupee.

Russia Was India’s Second Biggest Oil Exporter in May

In May Indian refiners received about 819,000 barrels per day (bpd) of Russian oil, the highest thus far in any month, compared to about 277,00 in April, the data showed.

New Delhi: Russia rose to become India’s second biggest supplier of oil in May, pushing Saudi Arabia into third place but still behind Iraq which remains number 1, data from trade sources showed.

In May Indian refiners received about 819,000 barrels per day (bpd) of Russian oil, the highest thus far in any month, compared to about 277,00 in April, the data showed.

Western sanctions against Russia for its invasion of Ukraine prompted many oil importers to shun trade with Moscow, pushing spot prices for Russian crude to record discounts against other grades.

That provided Indian refiners, which rarely used to buy Russian oil due to high freight costs, an opportunity to snap up low-priced crude.

Russian grades accounted for about 16.5% of India’s overall oil imports in May, and helped raise the share of oil from the CIS countries to about 20.5%, while that from the Middle East declined to about 59.5% %, the data showed.

The share of African oil in India’s crude imports last month surged to 11.5% from 5.9% in April, the data showed.

“Diesel is calling the tune … if you want to boost production of diesel and jet fuel then you need Nigerian and Angolan grades. China has cut imports of Angolan grades because of COVID-related shutdowns so some of these barrels are going to Europe and some to India,” said Ehsan Ul Haq, analyst with Refinitiv.

He said apart from availability of cheaper Russian barrels, higher official selling prices of Middle Eastern oil also pushed Indian refiners to buy Nigerian crude.

India’s oil imports in May totalled 4.98 million bpd, the highest since December 2020, as state refiners raised output to meet growing local demand while private refiners turned focus to gain from exports, the data showed.

India’s oil imports in May were about 5.6% up from the previous month and about 19% from a year earlier, the data obtained from sources showed.

India has defended its purchase of “cheap” Russian oil saying imports from Moscow made only a fraction of the country’s overall needs and a sudden stop would drive up costs for its consumers.

Higher oil imports from Russia, curbed OPEC’s share in India’s overall imports to 65% in April.