Amid sanctions imposed by the West against Russia over the invasion of Ukraine, government sources on Friday told CNBC-TV18 that India's efforts to procure oil from Russia are legitimate transactions and should not be politicised as the country is highly dependent on imports for meeting energy requirements.
The sources, requesting anonymity, said the jump in oil prices after the Ukraine conflict has added to its challenges. India imports nearly 85 percent of its crude oil requirements and the ongoing geopolitical developments have posed significant challenges to its energy security as the pressure for competitive sourcing has naturally increased, they said.
"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. Countries with oil self-sufficiency or those importing themselves from Russia cannot credibly advocate restrictive trading. India’s legitimate energy transactions should not be politicised."
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"For obvious reasons, we have had to stop sourcing from Iran and Venezuela. Most of India's crude imports are from West Asia (Iraq 23 percent, Saudi Arabia 18 percent, UAE 11 percent). USA has also now become an important crude oil source for India. 7.3 percent of imports come from USA," they added.
Imports from the US are expected to rise substantially in the current year, probably by nearly 11 percent, increasing market share to 8 percent.
Alternative sources of energy have often come at a higher cost, they said. "Russia has been a marginal supplier of crude oil to India (less than 1 percent of requirement, not among top 10 sources). There is also no government-to-government arrangement for oil import."
Russian oil/gas is being procured by various countries across the world, particularly Europe. Nearly 75 percent of Russia’s total natural gas exports are to OECD countries in Europe (like Germany, Italy, France). European countries such as the Netherlands, Italy, Poland, Finland, Lithuania, and Romania are also large importers of Russian crude oil.
Notably, recent Western sanctions on Russia have carve-outs to avoid impact on energy imports from Russia. However, Russian banks that are the main channels for European Union payments for Russian energy imports have not been excluded from SWIFT.
After the US had imposed a ban on Russian energy exports, the EU Foreign Policy Chief Josep Borrell told CNBC TV18 that European Union had no plans to impose a similar ban.
Meanwhile, Indian Oil Corporation has bought 3 million barrels of oil from Russia and other Indian oil marketing companies are also considering buying oil from Russian sources. Russian oil majors have offered crude to Indian companies at highly discounted rates.
(Edited by : Bivekananda Biswas)
First Published: Mar 18, 2022 3:48 PM IST
