India’s purchases of fossil fuels from Russia pales significantly in front of Europe, China and Turkey, though it has arguably received the maximum brickbats from the US and other Western nations, according to calculations based on new data from the Centre for Research on Energy and Clean Air (CREA). The data shows that Europe’s contribution to the Russian war machine is over 11 times that of India’s while China’s contribution exceeds India’s by a factor of over four.
Since the beginning of the conflict in Ukraine, Russia earned 201 billion euro in revenue from fossil fuel exports, CREA said based on data between February 24 and October 20. Europe accounted for over half the revenues, followed by China at 20 per cent and India at less than 5 per cent, according to calculations based on CREA data. Indian customs data places the contribution higher at around 9 per cent.
EU member states have spent a combined 106 billion euro on Russian fossil fuel imports from the beginning of Vladimir Putin’s invasion of Ukraine in February until now, said Lauri Myllyvirta, lead analyst, CREA. The EU continues to import crude oil, oil products, LNG and pipeline gas worth over 200 million euro per day compared to less than 50 million euro for India.
China paid around 41 billion euro for fossil fuel imports from Russia since the war began, of which 84 per cent was spent on oil and the rest on gas and coal. Germany was the second biggest contributor to Russian coffers at 24 billion euro, followed by Turkey at 16.5 billion euro.
By contrast, India clocked a lowly seventh towards purchase of oil, gas and coal from Russia, after the Netherlands, Italy and Poland, CREA data shows. India imported 9.2 billion euro of fossil fuels from Russia since late February, of which 7.7 billion euro was spent on imports of Russian oil grades led by Urals, and the rest towards coal purchases. Indian Foreign Minister S Jaishankar and Oil Minister Hardeep Puri have repeatedly discounted India’s role in Russian fossil fuel purchases.
Indian customs data shows higher import values but still much lower than what the EU and China paid for Russian fuel purchases. India spent $14.4 billion in the April-September period for around 19.3 million tonnes of the crude oil, according to customs data. After adding 893,000 barrels a day (3.2 million tonnes) for October, according to London-based commodity intelligence provider Vortexa data, valued at around $91 per barrel, based on the Indian crude price basket, India may have spent around $16 billion on crude imports from Russia. India does not import gas from Russia unlike Europe or China. Coal imports from Russia totalled around $2 billion since the invasion, according to industry estimates. That puts India’s contribution to Russia’s coffers at around $18 billion.
Russian oil is important for India because it is offered at a discount to West Asian grades. While the discount structure may shrink or expand, even a few dollars in savings per barrel helps state oil refiners lose less while selling petrol and diesel at state-controlled pump prices, said an official from a state refiner. It’s no secret that New Delhi has kept oil prices constant to keep inflation under control. Expected losses for state-run refiners of over Rs 41,000 crore in the first half of this fiscal may have surged even more if India was forced to abandon purchases of Russian crude, an industry official said. Withdrawing India’s purchases of around one million barrels a day of Russian crude from the market would have sent oil higher, he added.
US bank Goldman Sachs has raised its oil price forecasts for this year and next after the latest OPEC+ crude output cut. It raised its Brent forecast for the fourth quarter of this year and first quarter of next year by $10 to $110 a barrel and $115 a barrel, respectively, acknowledging that price risks are skewed potentially even higher.
Deutsche Bank recently warned that Germany, the home of luxury autos such as BMW and Mercedes, may turn to burning wood in winter for heat because of unaffordable natural gas prices. Chemicals major BASF, which is investing 10 billion euro in a chemical complex in China, warned that high energy prices make manufacturing unviable in Europe.
But the EU and Germany will continue to slash purchases of Russian fossil fuel in a US-led geopolitical game, ignoring concerns of its own citizens and businesses, an industry official said. The volume of Russia’s fossil fuel exports to the EU has fallen by 60 per cent but revenues fell by only 30 per cent on the year because the prices the EU pays for fossil fuel from Russia are almost twice as high as a year ago, Myllyvirta said.
Come December, India may have to re-evaluate purchases of Russian oil if a price cap comes into effect. Western nations have proposed a price cap on Russian oil but Moscow has threatened to stop oil sales, which may send oil prices over $200/barrel, according to analysts. Russian oil sales to India dropped slightly this month to around 893,000 barrels a day in October until this week from 908,000 barrels a day of crude September, according to Vortexa.
The fact that Russia is heavily dependent on the European shipping and insurance industry for fossil fuel exports may complicate supply chains further if the price cap comes into force.
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