India’s Right to Pursue Lucrative Russian Oil Deals
NATO must revisit their unrealistic expectation for New Delhi to cut off ties with Moscow. Local currency oil deals should be the future
K.A.Badarinath / New Delhi
There’s raging debate over India’s crude purchase from Russia that has invaded Ukraine thereby pitching Moscow against combined might of European Union, UK, the US and other NATO allies.
In last four weeks, lot has changed in terms of geo-political scenario especially in Eastern Europe and Baltic region thereby bringing oil trade into big focus.
India that pursued a ‘balanced’, ‘independent’ policy puts her on equidistant terms vis-à-vis the sanctioned Russia and NATO allies in the Ukrainian conflict. India’s position has come under enhanced scrutiny of world community owing to this unwavering approach.
While overwhelmingly, Indians internationally have hailed a ‘hands off’ policy towards the conflict, humanitarian intervention and ‘Operation Ganga’ have hogged global headlines.
In the melee, oil purchases from Russia that may total to two per cent of Indian imports have been questioned by pro-western lobbies. Veteran parliamentarian Subramanian Swamy stopped short of calling India’s policy as nothing short of being ‘tragic’ and ‘unsustainable’.
Hawks apart, India’s call to buy about 33 million barrels oil from Russia’s top-end exporter Roseneft is pragmatic and rooted in long term sustainability.
On March 9, an internal note got circulated amongst top echelons of Modi government. And, as insiders divulge, March 11, Prime Minister Modi himself took a call to continue with the oil imports from Russia on Indian terms.
Russian President Vladimir Putin who’s under increasing isolation seems to have more than accommodated India in the oil and other bilateral trade deals. Offering deep discounts, taking care of insurance costs, safe passage and delivery of crude at Indian ports were some terms that were tempting for India that was battling high oil import bill.
Payment in rupee terms for oil or settlements against Russian Ruble at pre-designated rates provides a cushion for Finance Minister Nirmala Sitharaman whose budget maths would have otherwise gone awry with Brent crude prices touching $114 per barrel on Monday.
Also, setting off oil payments against Russian exports especially the rough diamonds is not a bad idea in content and spirit of free trade.
Hence, Indian Oil, Bharat Petroleum, Mangalore Refineries & Petroleum Ltd, and a host of oil importers jumped into the fray to conclude contracts that would translate to billions of dollars for India.
It’s not just Russia, the entire middle-east line up has been tapped to conclude deals that could be showcased as to how geo-politics and oil trade were inseparable.
With US and UK phasing out hydrocarbon imports from Russia and European Union seeking to fall suit, very handsome deals may still be possible in local currencies to get around the sanctions.
For instance, Iran that was touted as the biggest oil supplier to India with unflinching ties, was the fall guy to Donald Trump’s sanctions owing to its nuclear programmes.
Only two days back, taking cue from Russian deals, Iran had hinted at resuming rupee – rial designated oil supplies with bilateral trade potential at $30 billion this fiscal. From $17 billion in pre-sanctioned era of 2019, bilateral trade has plunged to a very modest $2 billion this fiscal.
There’s no denial that both NATO and other western powers recognize India’s compulsions give its 85 percent crude requirements are met through imports. While the world is critiquing India’s sustained oil imports from Russia, India is all set to increase its share of oil import from the US by 11 percent. Moreover, both EU and the US have till now not considered India’s oil deals with Russia as violating war-related sanctions.
But, western lobbyists and the rumour mill around this ecosystem has been working overtime to put India on defensive mode to justify its continued oil deals with Russia.
India owes no explanation to anyone but herself. In fact, exploring local currency based oil and other trade deals would encourage multiplicity of such transactions lending variety to these transactions that are done away from referenced US dollar or the Euro.
The four largest oil suppliers like US, UAE, Saudi Arabia and Nigeria should also explore more innovative deals for India that’s spoilt with varied options.
Oil deals – both in spot and futures market—concluded by India cannot be subjected to sanctions that are being used as new neo-nuclear weapons by Western allies.
India’s economic and political interests globally are diverse and each response from New Delhi is laced with nuances that cannot be set aside by the world community.
It does not necessarily mean that India should not consider other energy options that limit hydrocarbons dependency. The earlier, it’s that much better.
(Author is Director & Chief Executive of Centre for Integrated and Holistic Studies based in New Delhi. Views expressed are author’s own.)
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