India will increase purchases of Russian oil, but that is not enough for Moscow
Russia looks to the East to find partners in the oil and gas sector and for eager buyers of its crude oil. Moscow's closest partner east is China, the world's largest oil importer, which is reportedly already profiting from the exodus of Western companies from oil, gas and metals projects in Russia.
Now Russia is aiming to forge closer energy ties with another major economy, India.
India, the third largest oil importer in the world, abstained in several UN votes condemning the Russian invasion of Ukraine, a sign that the Indian government keeps its ties with Moscow intact, although it has also warmed with the United States in recent years. India has largely adhered to US sanctions on Iran's oil exports, for example, regardless of the price discounts Iran offers to those willing to risk buying it.
But in recent years India has looked to Russia to diversify its oil imports, which account for 85% of Indian consumption, and most of them come from the Middle East.
Both India and Russia have an interest in continuing, and even strengthening, their energy and oil ties. India will get crude oil at discounted prices – marine crude that is not selling very well (if at all) west of St. Petersburg – while Russia will continue to have a large and expanding market for its oil in one of the fastest growing demand.
Hence, it is not surprising that Russian Deputy Prime Minister Alexander Novak and India's Minister of Oil and Natural Gas, Hardeep Singh Puri, discussed strengthening bilateral cooperation in the fuel and energy sector last week, as he said Thursday. the Russian government in a statement.
“What we have is a particularly privileged strategic partnership; the leaders of our countries maintain regular contact. Mutually beneficial cooperation is actively promoted, including Arctic LNG 2 and Sakhalin 1 projects. Gazprom supplies LNG to India and Rosneft continues its systematic work with its Indian partners. We are interested in further attracting Indian investment in the Russian oil and gas sector and expanding the sales networks of Russian companies in India, ”Novak said.
"Russian exports of oil and petroleum products to India have approached one billion dollars and there are clear opportunities to increase this figure," the Russian official said.
There is an apparent willingness on the part of both India and Russia to deepen their energy ties, but they must find ways to continue the oil trade without the SWIFT banking system and how to obtain bank guarantees and cargo insurance.
“For the past two or three days there has been an open offer where Russia has offered it (crude) at some sort of discounted price, but we don't know how it can be effective because a lot of factors will have to be weighed and we will have to take it. from some port to ship it and then figure out if it can get to India and if it's feasible, ”a senior Indian government official told the Times of India last week.
“Do they have insurance or not? The crux of the matter, if it can be resolved, must be resolved, ”the official added, referring to the cargoes from Russia.
India is also considering ways to maintain trade with Russia, not just crude oil, by establishing an alternative payment system with a bank account, an Indian official told the Hindustan Times this weekend. This may prove difficult to do because neither the Russian ruble nor the Indian rupee is widely used in international trade, analysts say.
India may offer an additional outlet for unwanted Russian oil to the West, but it will not be able to offset all the volumes that Western importers avoid.
Russia will have to shut down some of its oil production as it will not be able to sell all the volumes shifted from European markets to other regions, with Russian crude oil production falling and remaining depressed for at least the next three years, Standard said. Chartered last week. Even before the US ban on energy imports from Russia, the Russian commodity trade had become toxic to many global players.
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The article India will increase purchases of Russian oil, but in Moscow it will not be enough comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/lindia-aumentera-gli-acquisti-di-petrolio-russo-ma-non-basta-a-mosca/ on Mon, 14 Mar 2022 21:02:34 +0000.