Virendra Pandit
New Delhi: Moscow has welcomed New Delhi’s decision to stay away from the G7 and its allies’ decision on the price cap on Russian oil and offered to cooperate on leasing and building large-capacity ships to overcome the ban on insurance services and tankers.
Russian Deputy Prime Minister Alexander Novak made this offer during a meeting with the Indian Ambassador to Moscow, Pavan Kapoor, on Friday, the media reported on Monday.
“The Deputy Prime Minister welcomed India’s decision not to support the price cap on Russian oil, which was imposed on December 5 by the G7 countries and their allies,” the Russian Foreign Ministry said in a statement.
India multiplied its buying of Russian oil ever since it started trading at a discount as the West shunned it to punish Moscow for its invasion of Ukraine in February.
Novak asserted that even amid the energy crisis, Russia is responsibly fulfilling its contractual obligations for the supply of energy resources, diversifying energy exports to the countries in the East and South.
The statement said that to avoid dependency on the ban on insurance services and tanker chartering in the European Union (EU) and Britain, Russia offered India cooperation in leasing and building large-capacity ships.
New Delhi has defended its oil trade with Russia, saying it has to source oil from where it is the cheapest. Its imports in November were made ahead of a price cap agreed by the EU on Russian seaborne oil. The Indian oil companies will continue to buy oil from Russia outside the price cap.
External Affairs Minister S Jaishankar on December 7 told the Rajya Sabha that Indian refiners will continue to look for the best deals in the country’s interest.
“We do not ask our companies to buy Russian oil. We ask our companies to buy oil (based on) what is the best option that they can get. Now, it depends on what the market throws up,” he said, adding the companies will go after more competitive sources.
“Please understand, it’s not just we buy oil from one country. We buy oil from multiple sources, but it is a sensible policy to go where we get the best deal in the interests of the Indian people, and that is exactly what we are trying to do,” the EAM said.
Recently, the EU’s executive body asked its 27 member countries to cap the price of Russian oil at USD 60 a barrel as part of the West’s attempts to squeeze Moscow’s oil revenues and limit its ability to wage the inconclusive war in Ukraine while keeping global prices and supplies steady.
From December 5, they prohibited western shipping and insurance companies from handling Russian oil sold above the price cap. However, ships loaded with Russian oil before December 5 and unloaded at their destination before January 19 will not be subject to the price cap.
This prohibition led to a ‘traffic jam’ in the seas, and the Suez Canal, as nearly 40 large crude-carrying ships were not allowed to cross the waters.
But India can continue to buy Russian oil if it can send ships, cover insurance and devise a mode of payment.
“Introducing a price cap on Russian oil is an anti-market measure. It disrupts supply chains and could significantly complicate the situation in global energy markets,” Novak said.
“Such non-market mechanisms disrupt the global trading system and set a dangerous precedent in the energy market. Because of this, the problem of energy poverty is being aggravated not only in the developing world but also in the developed countries of Europe,” Novak said.
India and Russia reviewed the record growth in their oil trade and sought to continue this interaction, increasing cooperation on trade in energy resources, such as oil, petroleum products, liquefied natural gas, coal, and fertilizers.
In 2021, bilateral trade between Russia and India increased by 46.5 percent, to over USD 13.5 billion, Moscow said. In the January to September period this year, trade exceeded the figure for all of last year, totaling USD 20.4 billion.
Over the first eight months of 2022, Russian oil exports to India grew to 16.35 million tonnes. Deliveries of oil products and coal also increased.
For the second consecutive month, Russia remained India’s top oil supplier in November, surpassing traditional sellers Iraq and Saudi Arabia, market reports said.
Russia, which made up for just 0.2 percent of all oil India imported in the year ended March 31, 2022, supplied 9,09,403 barrels per day (BPD) of crude oil to India in November, making it over a fifth of India’s oil supplies.