Business

India, China And UAE Among "Laundromat" Countries Purchasing Russian Crude And Selling Oil Products To European Countries: Report

Swarajya Staff

May 02, 2023, 11:07 AM | Updated 11:08 AM IST


A crude oil processing facility (Representative image).
A crude oil processing facility (Representative image).

A report by Helsinki-based group has said that India is one of the "Laundromat" countries that bypassed European sanctions against Russia by purchasing Russian oil and selling processed products to European countries.

The report, citing latest data for the first quarter of 2023, was released last week and coincides with the latest data from Kpler and a report by Bloomberg, reports The Hindu.

The report said that despite being part of the price-cap coalition, that aims to limit Russia’s revenues from fossil fuel exports, the European and other western countries have increased imports of refined oil products by "leaps and bounds" from India, China, Turkey, the UAE, and Singapore - the countries that have become the largest importers of Russian crude oil.

Indian sellers and European buyers were accused in the report of allegedly "circumventing sanctions" by selling crude from a Gujarat refinery co-owned by Russia's Rosneft.

According to the report titled "Laundromat: How the price cap coalition whitewashes Russian oil in third countries" by the Finland-based Centre for Research on Energy and Clean Air (CREA), the "price cap coalition countries" have increased imports of refined oil products from countries that have become the largest importers of Russian crude.

"This is a major loophole that can undermine the impact of the sanctions on Russia," the report said.

"We call these five countries that have increased purchases of Russian oil and “launder” it into products shipped to countries having sanctioned Russian oil the “laundromat” countries,

European countries are simply substituting oil products they previously bought directly from Russia, with the same products now “whitewashed” in third countries and bought from them at a premium.

Of all the alleged "laundromat" countries, according to the report, India leads in crude products' export to price-cap coalition countries including EU, G7 countries, Australia, and Japan.

India has reported exported almost 3.8 million tonnes of oil products, surpassing all other countries. In April, India was also the leading global consumer of seaborne Russian crude for the fifth consecutive month. In March 2023, India's diesel exports surged to 160,000 barrels per day, almost triple the pre-Ukraine war levels. Diesel trade is now a key part of India-EU trade.

According to the report by CREA, the majority of oil products are being exported from two ports located in Gujarat, India. These are the Sikka port that caters to the Jamnagar refinery owned by Reliance, and the Vadinar port that transfers oil products from Nayara energies - a company partially owned (49.13 per cent) by Rosneft.

The report insinuates that such exports may be seen as a way of "circumventing sanctions" that have been unilaterally imposed by the US and Europe. The report stated the port holds significant importance for Russia's oil industry, particularly Rosneft.

The report recommended that “place of origin” certification should accompany oil products sold to Europe.


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