As oil prices surge following Ukraine conflict, India focuses on competitive energy sources
Nearly 85% of India's crude oil requirement has to be imported
With the jump in oil prices after the Ukraine conflict adding to the existing challenges, India is now focusing on competitive energy sources.
Such offers from all producers are welcome, said an official source. Indian traders too operate in global energy markets to explore best options, the source added.
India's stand comes amid reports that Moscow has offered crude oil and other commodities at a discount to New Delhi. It is worth noting that the US and its allies have imposed sanctions on Russia after President Vladimir Putin’s decision to launch military operations in Ukraine
The view within official circles in New Delhi is that countries with oil self-sufficiency or those importing themselves from Russia cannot credibly advocate restrictive trading.
"India’s legitimate energy transactions should not be politicized," said the source, referring to the recent developments.
In this context, it is being pointed out that Russian oil and gas is being procured by various countries across the world, particularly Europe.
Nearly 75% of Russia’s total natural gas exports is to OECD Europe, like Germany, Italy, France. European countries like Netherlands, Italy, Poland, Finland, Lithuania, Romania are also large importers of Russian crude oil.
According to sources, recent Western sanctions on Russia have carve outs to avoid impact on energy imports from Russia. Russian banks that are the main channels for European Union payments for Russian energy imports have not been excluded from SWIFT.
As per available data, nearly 85% of India's crude oil requirement (5 million barrels a day) has to be imported.
Russia has been a marginal supplier of crude oil to India. It supplies less than 1% of the country's requirement, and is not among the top 10 sources. Also, there is no G2G arrangement of import.
Most of the imports are from West Asia (Iraq 23%, Saudi Arabia 18%, UAE 11%). USA has also now become an important crude oil source for India (7.3%).
Imports from the US are expected to increase substantially in the current year, probably by around 11%, to take its market share to 8%.
"Geopolitical developments pose significant challenges to India's energy security. For obvious reasons, we have had to stop sourcing from Iran and Venezuela. Alternative sources have often come at a higher cost," said a source.