*Oil diplomacy: India’s stance must remain consistent – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/opinion/oil-diplomacy-indias-stance-must-remain-consistent/article65323603.ece

A file picture of the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk Region, Russia

A file picture of the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk Region, Russia | Photo Credit: VASILY FEDOSENKO

The pressure brought on India over its Russian oil imports is unfair. India must look to source more oil from that country

The fuss over India’s oil imports from Russia appears to be a case of “much ado about nothing”. Answering with ‘Perfection’ to one such question by the media in the US was External Affairs Minister S Jaishankar.

Recently Jaishankar answering to a question said, “I noticed you referred to oil purchases. If you are looking at energy purchases from Russia I would suggest that your attention should be focused on Europe, which probably…We do buy energy which is necessary for our energy security, but I suspect looking at the figures probably our total purchases for the month would be less than what Europe does in an afternoon…so you might want to think about it.”

Jaishankar is an erudite diplomat, who now wears the hat of the Foreign Minister. This response by the Minister also set the record straight on the small quantities that India imports from Russia, which should not be a cause of concern.

Iran parallel

Some are also questioning India’s positioning vis-a-vis its stance during the Iran sanctions. Putting it in a perspective Kabir Taneja, Fellow Strategic Studies Programme, Observer Research Foundation, said: “It ultimately comes down to geopolitics. During Iran episode there was much less at stake for India as far as energy trade was concerned because India could easily diversify its portfolio. While in case of Russia more than energy it is about defence.”

“Currently, Indian armed forces are dependent on Russian hardware. Therefore, India’s current positioning is not comparable to what was with Iran,” he added.

On April 6, in a statement to Parliament on the issue Jaishankar had said: ”…. There are numerous other measures in different domains, including financial and payment carve-outs. Even non-essential goods that have salience for individual economies have been factored in the equation. So, what should India then do in these circumstances?”

“At a time when energy costs have spiked, clearly we need to ensure that the common person in India is not subject to an additional and unavoidable burden. Similarly, fertiliser prices have a direct implication for the livelihood of the majority of our population. And indeed, for food prices for all of us. Even the security of the nation is at stake, as we maintain our defence posture in the manner that the current security challenges warrant…,” he had said.

In fact, last month, Minister for Petroleum and Natural Gas Hardeep Singh Puri, answering a supplementary question in Parliament had said though India is buying more volumes of crude oil from Russia, but it is still less than 1 per cent of the total oil imports while the volumes from the US will rise significantly.

Responding to a question on the impact of Ukraine-Russia conflict on import of natural gas and crude oil, the Minister had said, “In Financial Year 2020-21, India imported 85 per cent of its crude oil requirements and 54 per cent of its natural gas requirement. As per Petroleum Planning & Analysis Cell (PPAC), India’s major sources of crude oil imports are Iraq, Saudi Arabia, UAE, Nigeria and USA. Indian oil and gas Public Sector Undertakings had imported approximately less than one per cent of its total crude oil import from Russia in the year 2021-2022 (till January). India imported only 0.419 million tonnes of crude oil from Russia, as compared to overall crude oil imports of 175.900 million tonnes.”

“In the current situation of high volatility in global energy markets, Government of India is closely monitoring the situation. No adverse impact on hydrocarbon energy agreements is currently foreseen,” he had said.

If one goes by these numbers then the pressure on India seems to be uncalled for. But it raises another question. If Russian crude oil was available why were Indian refiners not importing in bulk from there? In the current situation, if reports are to be believed Russia is willing to take care of the logistical challenges.

Interestingly, media reports in March said private refiner Nayara Energy, which is part-owned by Russia’s Rosneft, had purchased Russian oil after a gap of a year. What was stopping Nayara from doing it?

According to Nayara’s Spokesperson, “Like any other refinery, Nayara Energy has ongoing crude sourcing agreements to optimise its crude basket with an aim to achieve the best option for our refinery. The company remains committed to strengthening India’s energy security.”

Logistics issues

According to industry observers, economics — logistics and payment — of buying oil from Russia was not favourable for Indian refiners and therefore it was not enjoying a favoured nation status from them.

According to experts, while most of Russian crude was sold through pipeline, getting crude through ship would take between 25 days and 40 days depending on the vessel and also the route. Most of Indian purchases are in bulk.

On March 24, Jaishankar told Parliament that a multi-ministerial group had been convened to look into overcoming the challenges in trade with Russia, including managing payments for exporters and importers.

While there are debate and discussions over oil imports, there is another view doing the rounds that India could improve its position by acquiring more oil and gas acreages there. Today, Russian oil is at a comfortable price, but still economic challenge remains. Going ahead, what will help India in the long term is to maintain a policy consistency in the realm of oil diplomacy.

Published on April 15, 2022

Oil and Gas


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