NEW DELHI : India is concerned about Russia’s successive crude production cuts to comply with the Opec+ agreement by curtailing production even from assets where Indian state-run firms are stakeholders, two people close to the matter said.
“The Russians have reduced production as part of Opec+. However, India is not a part of it, yet production is being reduced wherein foreign entities are partners. With Russian production coming down, the volume of oil available in the global market has also come down. With Iranian and Venezuelan oil off the table, the world is being starved of oil. We have raised the issue at several levels,” one of the two people said on condition of anonymity.
State-run ONGC Videsh Ltd (OVL), Bharat Petroresources Ltd, Indian Oil Corp. Ltd (IOCL) and Oil India Ltd (OIL) have invested a total of $16 billion in Russia. While OVL, the overseas unit of Oil and Natural Gas Corp. (ONGC) Ltd, owns a 20% stake in the Sakhalin-1 hydrocarbon block, a consortium of OVL, OIL, IOCL and Bharat Petroresources own 49.9% in Rosneft’s subsidiary CSJC Vankorneft. Also, another consortium comprising OIL, IOCL and Bharat Petroresources owns 29.9% of LLC Taas-Yuryakh.
A second government official, however, said India is not “unduly” worried about the development. “Everybody will cut production because they want the price to rise, but they also need to sell. We raise it to the Russians all the time,” the person said, also on condition of anonymity.
India, the world’s third-largest oil importer, has voiced concerns about rising oil prices amid a precarious global economic recovery.
India imports more than 80% of its oil requirements, and the production cuts have contributed to a surge in oil prices. India is particularly vulnerable as any increase in global prices can affect its import bill, stoke inflation and widen trade deficit. India’s import of crude oil and petroleum products rose 29.5% to $209.57 billion in 2022-23.
Queries emailed to the spokespeople for the Russian embassy in New Delhi, India’s ministries of external affairs, and petroleum and natural gas, Rosneft, OVL, Bharat Petroresources, IOCL and OIL on 6 September remained unanswered till press time.
Amid the growing volatility in the energy market and voluntary cuts by major oil producers, India is also considering reducing its dependence on crude oil. The recent launch of the Global Biofuels Alliance with India is seen as a move in that direction. A statement from the petroleum ministry on 11 September said the alliance would help reduce the world’s dependence on petrol and diesel.
Oil prices have been elevated for around two months now, with Brent crude trading at $92.62 a barrel and West Texas Intermediate at $89.43 a barrel at press time. The cost of the Indian basket of crude, comprising Oman, Dubai and Brent crude, was $92.65 per barrel on 12 September, according to Petroleum Planning & Analysis Cell data.
The discount on Russian crude oil supplies to Indian refiners has also been dwindling. Russia emerged as a major supplier to Indian refiners for the first time in 2022-23 after it started giving oil at discounted rates amid the Ukraine war. According to data from the Union ministry of commerce and industry, oil imports from Russia have continued to rise in this fiscal. During the first quarter of 2023-24, crude oil imports from Russia rose nearly three-fold from a year earlier. The value of imports from Russia in the three months to June stood at $12.36 billion, almost tripling from a year earlier.\
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Updated: 13 Sep 2023, 11:40 PM IST