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Russia Sanctions: India Profiting From Russian Oil Trade by Exporting Refined Petroleum

RiazHaq

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India is defying western sanctions to buy millions of barrels of discounted Russian crude oil and exporting refined petroleum products with a big markup to make a huge profit. China has yet to increase its oil imports from Russia, according to news reports. Meanwhile, India's neighbors Bangladesh and Pakistan are abiding by western sanctions and paying much higher market prices to buy oil for their domestic needs, and hurting their people. Such double standards are not going unnoticed.




India is importing large amounts of deeply discounted Russian crude, running its refiners well above capacity, and capturing the economic rent of sky-high crack spreads and exporting gasoline and diesel to Europe, according to MarketWatch. “As the EU weans from Russian refined products, we have a growing suspicion that India is becoming the de facto refining hub for Europe,” said Michael Tran, global energy strategist at RBC Capital Markets, in a Tuesday note. Here’s how the puzzle pieces fit together, according to Tran:


"India is buying record amounts of severely discounted Russian crude, running its refiners above nameplate capacity, and capturing the economic rent of sky-high crack spreads and exporting gasoline and diesel to Europe. In short, the EU policy of tightening the screws on Russia is a policy win, but the unintended consequence is that Europe is effectively importing inflation to its own citizens. This is not only an economic boon for India, but it also serves as an accelerator for India’s place in the new geopolitically rewritten oil trade map. What we mean is that the EU policy effectively makes India an increasingly vital energy source for Europe. This was historically never the case, and it is why Indian product exports have been clocking in at all-time-high levels over recent months".

Bangladesh and Pakistan are afraid to buy Russian oil for fear of western sanctions while American ally India feels free to do so. As Pakistani Finance Minister Miftah Ismail told CNN's Becky Anderson in an interview, “It is very difficult for me to imagine buying Russian oil. At this point I think that it would not be possible for Pakistani banks to open LCs or arrange to buy Russian oil". Similarly, Bangladeshi Foreign Minister AK Abdul Momen told journalists: “You are seeing that they (western nations) keep bossing us and you (journalists) also encourage them. Every day, they come up with new issues. We used to call them development partners. They do not pay for the development but keep giving advice.” “We do not want to get into any problem. We want peace in the world,” Momen added.

The West, particularly the United States, is turning a blind eye to India's actions when it comes to busting sanctions on Russia. Indian Prime Minister Narendra is openly funding the war in Ukraine by buying weapons and oil from Russia. At the same time, India's smaller neighbors feel intimidated by the threat of western sanctions if they follow Modi's example. Such double standards are not going unnoticed.

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Indos

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Factbox-Who is buying Russian crude oil and who has stopped​


Reuters.png
CommoditiesMay 31, 2022 08:11AM ET



CURRENT BUYERS

BHARAT PETROLEUM


Indian state-run refiner Bharat Petroleum Corp Ltd has bought 2 million barrels of Russian Urals for May loading from trader Trafigura, two people familiar with the purchase said.

The company regularly buys Russian Urals for its 310,000 barrels per day (bpd) Kochi refinery in southern India.

HINDUSTAN PETROLEUM,

India's state refiner bought 2 million barrels of Russian Urals for May loading, according to trading sources.

INDIAN OIL CORP

India's top refiner has bought more than 6 million barrels of Urals since Feb. 24 and has a supply contract with Rosneft for up to 15 million barrels of Russian crude in 2022.

ISAB

Italy's largest refinery, owned by Lukoil-controlled Swiss-based Litasco SA, continues to buy Russian crude, while the Italian government has been looking into the possibility of temporarily nationalising ISAB.

LEUNA

The land-locked Leuna refinery in eastern Germany, majority-owned by France's TotalEnergies, continues to buy Russia crude fed by the Druzhba pipeline.

MANGALORE REFINERY AND PETROCHEMICALS

The state-run Indian refiner has bought 1 million barrels of Russian Urals crude for May loading via a tender from a European trader, a rare purchase driven by the discount offered.

MIRO

Germany's largest refinery, 24% owned by Russia's Rosneft, continues to buy Russian crude, which accounts for about 14% of the total intake..

MOL

The Hungarian oil company has said it would take at least 2-4 years to fully switch its two refineries in Slovakia and Hungary to alternative crude processing, which currently accounts for about 35% of total intake.

NAYARA ENERGY

The Indian private refiner, part-owned by Rosneft, has purchased Russian oil after a gap of a year, buying about 1.8 million barrels of Urals from Trafigura.

NEFTOCHIM BURGAS

A Bulgarian refinery, owned by Russia's Lukoil, continues to refine Russian crude, which accounts for about 50% of its intake, according to government officials.

PCK SCHWEDT

Germany's PCK Schwedt refinery, 54% owned by Rosneft, continues to buy Russian crude fed via the Druzhba pipeline.

German government officials have said they were looking to replace Russian crude with alternative imports via the German port of Rostock or via ports of neighbouring Poland to keep the refinery running.

PERTAMINA

Indonesian state energy firm PT Pertamina is considering buying crude oil from Russia as it seeks oil for a newly revamped refinery.

SINOPEC

China's state-run Sinopec (NYSE:SHI), Asia's largest refiner, is continuing to purchase Russian crude under previously signed long-term contracts.

FORMER BUYERS

BP (NYSE:BP)

The British oil major has exited Russia and said it would no longer make new deals with Russian entities for loading at Russian ports unless "essential for ensuring security of supplies".

ENEOS

Japan's biggest refiner has stopped buying crude oil from Russia, and plans to source alternative supplies from the Middle East.

ENI (BIT:ENI)

The energy group, 30.3% owned by the Italian government, has suspended purchases of Russian oil, including for Germany's Bayernoil refinery, where it has a minority stake.

EQUINOR

Norway's majority state-owned energy firm has stopped trading Russian oil and exited Russia, recording a $1.08 billion impairment in its first-quarter earnings report

GALP

The Portuguese oil and gas company has suspended all new purchases of petroleum products from Russia or from Russian companies.

GLENCORE

The global mining and trading firm said it would not enter any new trading business relating to Russian-origin commodities unless directed by the relevant government authorities.

HELLENIC PETROLEUM

Greece's biggest oil refiner has stopped buying Russian crude, replacing it with additional supplies from Saudi Arabia and other countries.

NESTE

From the start of April, the Finnish refiner has replaced about 85% of the Russian crude oil with other crudes, and said it will not enter in new deals to buy Russian oil.

OMV PETROM

Romania's top oil and gas firm, controlled by Austria's OMV has said it was preparing to wean itself off Russian crude imports, which account for about 30% of its Petrobrazi refinery's annual needs.

PKN Orlen

Poland's largest refiner has stopped buying Russian crude on the spot market, switching to North Sea oil, with previously signed long-term supply contracts expiring by the end of this year. Russian crude accounts for about 30% of its intake.

PREEM

Sweden's largest refiner, owned by Saudi billionaire Mohammed Hussein al-Amoudi, has replaced Russian barrels, which made up 7% of its supplies, with North Sea barrels.

REPSOL

The Spanish company has stopped buying Russian crude oil in the spot market.

SHELL

The world's largest petroleum trader has stopped buying Russian crude and refined products, including blended fuels.

TRAFIGURA

The Geneva-based global commodities trader plans to stop all purchases of crude oil from Rosneft by May 15 when tighter EU rules on Russian oil sales come into effect, and "substantially" reduce volume of refined products it buys from Rosneft.

TOTALENERGIES

The French energy firm, which operates Leuna refinery in eastern Germany, has stopped making new deals to buy Russian oil and plans phase out its purchases by the start of 2023.


VARO ENERGY

The Swiss refiner, which owns 51.4% in Germany's Bayernoil refinery, has said it would no longer enter into new deals to buy Russian crude.

 

Olympus81

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Sir Pakistan can’t import Russian oil, because no refining capacity, cars cannot be driven on Russian petrol, powerplants stop working, our generators go bad when Russian oil is used, oil shipment to Pakistan not possible as Pakistani ports don’t support, ships coming to Pakistan will be on fire when they carry Russian oil etc etc.

Beggars can’t be choosers.
 

RiazHaq

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Russian Oil Producers Stay One Step Ahead of Sanctions
Shippers and refiners hide origin of Russian oil, and some is getting into the U.S.


Indian refined oil-product exports, beefed up by cheap Russian supplies, have grown sharply since the beginning of the war. Daily shipments to Europe have risen by a third and by 43% to the U.S. on a quarterly basis.

“If Indian refineries on the west coast have been importing lots of Russian crude then yes, probably there will be some Russian crude that has gone into the making of these products,” said Koen Wessels, an oil-products analyst at consulting firm Energy Aspects.

This comes at a time when gasoline and diesel prices have hit records in the U.S. due to high crude prices, weighing on consumers at a time when inflation was recently at a four-decade high. Extra supply from abroad may be less scrutinized, analysts said.

-------

Europe just targeted Russian crude with its toughest sanctions yet, but shippers and refiners are getting the oil to market by obscuring its origins. Some fuels believed to be partially made from Russian crude landed in New York and New Jersey last month.

The cargoes were brought through the Suez Canal and across the Atlantic from Indian refineries, which have been big buyers of Russian oil, according to shipping records, Refinitiv data and analysis by Helsinki-based think tank Centre for Research on Energy and Clean Air.

In the wake of the invasion of Ukraine and sanctions from the U.S. and the European Union, traders are working to obscure the origins of Russian oil to keep it flowing. The oil is being concealed in blended refined products such as gasoline, diesel and chemicals.

Oil is also being transferred between ships at sea, a page out of the playbook used to buy and sell sanctioned Iranian and Venezuelan oil. The transfers are happening in the Mediterranean, off the coast of West Africa and the Black Sea, with oil then heading toward China, India and Western Europe, according to shipping companies.

A refinery owned by Indian energy giant Reliance Industries Ltd. bought seven times more Russian crude in May, compared with prewar levels, making up a fifth of its total intake, according to Kpler.

Reliance chartered an oil tanker to carry a cargo of alkylate, a gasoline component, departing from the nearby Sikka port on April 21 without a planned destination. Three days later, it updated its records with a U.S. port and sailed over, discharging its cargo on May 22 in New York.

“What likely happened was Reliance took on a discounted cargo of Russian crude, refined it and then sold the product on the short-term market where it found a U.S. buyer,” said Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air. The organization is tracking Russian fossil fuel exports and their role in funding the Ukraine war. “It does look like there’s a trade where Russian crude is refined in India and then some of it is sold to the U.S.”

Reliance didn’t respond to a request for comment. Its joint chief financial officer, Srikanth Venkatachari, said in a May 6 briefing that the company has minimized feedstock cost by sourcing “arbitrage barrels.”
 

Faqirze

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Bangladesh and Pakistan are not on India’s level. You may not like it but it's true.
Do realize that those two countries are an extremely low bar of comparison for a country like India that claims to be a rising economic superpower. I think its a bit pathetic that Indians still compare themselves to "lowly" Pakistan and Bangladesh despite claiming such
 

Apollon

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Yawn. Someone should note here that india buys miniscule amounts and russia runs into the ground losing its main customer who paid market prices.


If India would be an annoyance we would simply shut them off.
 

INS_Vikrant

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Most countries who have stopped crude oil import from Russia are also the same ones who are buying refined petroleum products from that same oil from India LOL
 

cloud4000

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Do realize that those two countries are an extremely low bar of comparison for a country like India that claims to be a rising economic superpower. I think its a bit pathetic that Indians still compare themselves to "lowly" Pakistan and Bangladesh despite claiming such
I did not make the comparison, the OP did. The author said it was a double standard. My post was to explain why this is so.

I would like to add that life is unfair, doubly so for international relations.
 

HydraChess

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Yawn. Someone should note here that india buys miniscule amounts and russia runs into the ground losing its main customer who paid market prices.


If India would be an annoyance we would simply shut them off.
"We"???? Who is this "we"? Greeks are so lazy and bankrrupt that they do not buy or sell anything from India. Now go back to being irrelevant.

After Brexit, EU and UK both need India.
 
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Wergeland

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I did not make the comparison, the OP did. The author said it was a double standard. My post was to explain why this is so.

It has nothing to do with size. The USA could easily put sanctions on India but choose not to, because they fear of pushing India too far into Sino-Russian camp. For many strange reason US has not choosen to give countries like Pakistan, Bangladesh and Indonesia the same favor. That is exactly what boggles my mind. As if the US genuinly fears muslim nations becoming too strong. It had no problem with pumping up China and now India, but it cannot tolerate any single European or Islamic nation being too big and powerful.


India did a masterstroke in foreign policy when it comes to balancing between USA Russia and China. Its a member of China led BRICS, SCO and NDB but also so called Quad and a US ally.
 

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