India defends Russian oil deal

Citing India’s energy needs, the government continues to strongly defend its deal with Russia for the purchase of 3 million barrels of crude at a discounted price.

With disquiet running deep in the US and prominent European capitals over India’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”.

The apparent dig at the US follows remarks by the White House cautioning India against placing itself on the wrong side of history by buying Russian crude.

While India doesn’t 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 also comes ahead of the India-US 2+2 dialogue which, after several false starts, is finally expected to take place in the second week of April.

While the US is trying to convince India that the Russian action in Ukraine will embolden China 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.

“Notably, recent Western sanctions on Russia have carve-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 SWIFT payment system.

“Russian oil or gas is being procured by various countries across the world, particularly Europe. 75% of Russia’s total natural gas ex- ports is to OECD Europe. European countries 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 added.

What seems to have irked the central 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. Sources said most of the imports are from West Asia (Iraq 23%, Saudi Arabia 18%, UAE 11%). Imports from the US are expected to increase, taking its market share to 8%.

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