Indian economy & Foreign affairs

[RClarkTaylor]

India and Russia have signed a historic oil deal valued at approximately $13 billion annually, marking the largest energy partnership between the two countries to date. This agreement was reached between Rosneft, Russia's state-owned oil company, and Reliance Industries, a major Indian private oil refining firm.

Key Details of the Deal​

1. Volume and Duration: The deal entails the supply of up to 500,000 barrels of crude oil per day over a period of 10 years, starting in January 2025. This volume represents about 0.5% of global oil supply.
2. Cargo Specifications: Rosneft will deliver 20-21 Aframax-sized shipments (80,000 to 100,000 metric tons) and three cargoes of fuel oil (approximately 100,000 tons each) monthly to Reliance's refinery complex in Jamnagar, Gujarat.
3. Pricing Structure: The pricing for the crude oil will be based on differentials to the average Dubai price for the loading month, allowing for annual reviews of the contract terms.
4. Strategic Importance: This agreement strengthens India's position as a major importer of Russian oil, particularly as Western sanctions have led many countries to reduce their purchases from Russia. India has become the largest buyer of seaborne Russian crude since the onset of the Ukraine conflict.
5. Economic Context: The deal is seen as mutually beneficial; it provides India with access to discounted crude oil while helping Russia mitigate the impact of sanctions on its energy sector. Russian oil is currently available at prices lower than many rival grades due to these sanctions.
6. Geopolitical Implications: The signing of this deal comes amid increasing competition among global oil producers for access to India's rapidly growing energy market, particularly as China’s demand slows down. It also poses challenges for Middle Eastern producers like Saudi Arabia, who are vying for market share in India.
7. Previous Agreements: Prior to this long-term deal, Reliance had an agreement with Rosneft for monthly purchases of at least 3 million barrels, which has now evolved into this larger commitment.

Conclusion​

The $13 billion oil deal between India and Russia signifies a landmark moment in their bilateral relations, particularly in the energy sector. As both nations navigate complex geopolitical landscapes, this agreement not only enhances energy security for India but also provides crucial support for Russia's economy amid ongoing sanctions. The implications of this partnership will likely resonate across global oil markets and influence future energy dynamics in the region.

 

[Akbar26]

Based on the information that is currently available, it does not appear that the United States is purchasing Russian LNG from India and then exporting it to Europe at inflated costs. In light of the larger context of U.S. sanctions, the following are the main points concerning India's position on buying Russian LNG:

Russia's Arctic LNG 2 project is subject to Western sanctions, and India has formally declared that it will not buy LNG from the project. Oil Secretary Pankaj Jain and other Indian officials have stressed that their country is staying away from sanctioned commodities. This shows that India is being careful about getting involved with Russian energy projects that are under international investigation because of the crisis in Ukraine. 1.

Sanctions by the United States: In response to Russia's military operations, the United States has sanctioned the Arctic LNG 2 project in an effort to limit the country's energy profits.
Concerns about Russia's alleged use of a "shadow fleet" to transport oil and, possibly, LNG in defiance of sanctions have arisen in light of the fact that these sanctions have hit multiple project participants at once. In order to avoid discovery and the execution of sanctions, some of the ships in this fleet may use means other than conventional tracking systems. 4

Despite an uptick in oil trade with Russia, India has been wary of participating in sanctioned projects like Arctic LNG 2 due to shifting trade dynamics. This move is in line with India's larger plan to meet its energy demands in a way that is consistent with global standards. U.S.
Indian Relations:
Energy cooperation has been a key area in which ties between the two countries have grown stronger in recent years. The difficulties of negotiating these partnerships are highlighted by the fact that the United States has voiced worries about any possible dealings with sanctioned Russian firms.
Market Consequences:
Under current sanctions systems, especially those imposed by the United States, India's procurement of Russian LNG through intermediaries or indirect channels would certainly be subject to scrutiny. However, India has already stated categorically that it will not participate in LNG projects from Russia that are subject to sanctions.

In summary
India has taken a stance against sanctioned commodities, and there is no evidence to support the claim that the US is buying Russian LNG from India and reselling it at inflated prices. The situation is constantly changing due to shifting geopolitical dynamics, especially in regards to energy trade and international sanctions imposed as a result of Russia's actions in Ukraine.