India’s crude imports from Russia are set to surge strongly above 1mbd again in the second week of August, according to energy cargo analyst Vortexa as China maintains its position as lead importer of seaborne Russian crude.
India’s oil public sector undertakings (PSUs) are already procuring crude from countries in various geographical locations viz. Middle East, Africa, North America, South America to mitigate the risk of dependence on crude from single region, Minister of State for Petroleum and Natural Gas Rameswar Teli informed Rajya Sabha on Monday (8 August).
India had surpassed China in the three weeks to 24 July, importing 1.17mbd over that period but for the last week of July as well as the first week of August Indian imports of Russian crude averaged below 400kbd, less than half than the usual volume over recent months. The monthly tally in July puts China at 1.06mbd and India at 910kbd.
According to Vortexa, "India may be past a peak in Russian crude procurement for now, as export volumes are slightly easing and competition between China and India for Russian oil appears to be driving up prices."
"With alternative buyers to China, such as Japan, South Korea and the US dropping out of the market, it is now also in the Russian interest to diversify sales somewhat," the report finds.
A study by the Observer Research Foundation finds that in the pandemic year 2020-21, over 84 per cent of India’s petroleum product demand (crude oil and petroleum products) was met with imports. Gross petroleum imports of about 239 MT of value $77 billion accounted for over 19 per cent of India’s total imports in 2020-21.
In 2019-20, over 85 per cent of petroleum product demand was met with imports. Gross petroleum imports of over 270 MT of value $119 billion accounted for 25 per cent of India’s total imports.
As per the statement presented in the Upper House of Parliament, during financial year, 2019-20, before the Organization of Petroleum Exporting Countries (OPEC) imposed a cut, import of crude oil by Indian PSUs from Middle East countries was 69.02 per cent, that is 88.9 million metric tonne (MMT) out of total import of 128.8 MMT but during FY 2020-21, import of crude oil from Middle East reduced to 63.49 per cent amounting to 69.9 MMT out of total import of 110.1 MMT.
This reduction in import of crude from Middle East is mainly on account of crude oil production cut by OPEC since May 2020, as countries which are members of OPEC, produce and export crude oil to buyer countries as per their agreed modified quota of OPEC plus.
However, OPEC started increasing the production of crude oil in phased manner and during FY 2021-22, crude oil import from Middle East countries increased to 69.49 per cent accounting for 83.69 MMT out of total import of 120.44 MMT. Oil PSUs are also sourcing crude oil from Guyana, USA and Russia based on techno-economic evaluation.
According to ORF, in 2006-07, India sourced crude oil from 27 countries and in 2020-21 India sourced crude oil from 42 countries. The share of Persian Gulf countries in India’s crude imports has stayed at around 60 per cent over the last 15 years.
The share of imports from Africa has decreased from about 17 per cent in 2009-10 to about 13 per cent in 2019-20, and the share of South American countries has increased from about 6 per cent to about 12 per cent in 2019-20. Countries from the Persian Gulf, Africa, and the South America comprised over 80 per cent of India’s top 10 oil importers.
The leading oil exporter to India in 2020-21 was Iraq which has been stepping up its share in India’s imports from about 9 per cent in 2009-10 to over 22 per cent in 2020-21 while the US which was not among the top 20 oil exporters to India a decade ago, emerged as the eighteenth largest exporter in 2017-18, nineth largest in 2018-19, seventh largest in 2019-20, and fourth largest in 2020-21.
Nivedita Mukherjee is a senior journalist covering economy, business, and trade.
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