Russia crude in tank, India steps up petroleum product exports to EU as region shuns Moscow

India’s petroleum product exports to EU countries rose 20.4 per cent year-on-year in April-January to 11.6 million tonnes, with the region climbing two spots from the corresponding period of the previous fiscal to top the table of 20 regions importing refined products from India.

As the European Union (EU) weans itself off refined petroleum products from Russia, Indian refiners, particularly private sector companies, are rushing in to fill the gap, making the region the top destination for India’s refined product exports, government data shows.

This comes as Indian refiners snap up discounted Russian crude oil shunned by the EU and other Western powers, with analysts pointing to a clear possibility of products refined from Russian barrels reaching the EU’s markets via India.

In the run-up to the EU’s ban on Russian petroleum products from February 5 — owing to the Ukraine invasion — India saw its refined product exports to the region rise for five straight months, data from the Directorate General of Commercial Intelligence and Statistics (DGCIS) shows.

The exports touched 1.90 million tonnes in January, the highest monthly volume in the first 10 months of the current fiscal.

In April-January, the EU accounted for close to 15 per cent of India’s total petroleum product exports of 79 million tonnes, against 12 per cent in the year-ago period when overall refined product exports were marginally higher at 79.9 million tonnes.

In the four months leading to the EU’s ban on Russian refined products, the region’s share in India’s petroleum product exports rose from 16 per cent to almost 22 per cent. Commodity-wise export data is released with a lag and the DGCIS is likely to publish the February data only in April.

India’s petroleum product exports to EU countries rose 20.4 per cent year-on-year in April-January to 11.6 million tonnes, with the region climbing two spots from the corresponding period of the previous fiscal to top the table of 20 regions importing refined products from India.

In case of petroleum product exports, DGCIS classifies the data by 20 international regions. Europe is made up of three regions — EU, European Free Trade Association, and other European countries. Similarly, Asia is divided into six trade regions while five regions constitute Africa.

If petroleum product exports to the other two European regions listed in the DGCIS data are added to exports to the EU, supplies from India to Europe total 14.5 million tonnes for April-January, up almost 19 per cent over the corresponding period of the previous fiscal.
Industry watchers see the EU’s ban on Russian petroleum products as an opportunity for Indian refiners — particularly export-oriented private sector companies like Reliance Industries and Nayara Energy — to increase purchases of discounted Russian crude.

Serena Huang, head of APAC Analysis at energy cargo tracker Vortexa, said that India’s private sector refiners could “edify themselves as key diesel suppliers to Europe”, incentivising them “to slurp up Russian crude, as long as it remains attractively priced”.

As per Vortexa data, India imported a record 1.62 million barrels per day of Russian oil in February, up 29 per cent from January’s 1.26 million barrels a day, which was also a record. Russia, which used to be a marginal supplier of oil to India before the war in Ukraine, retained its newfound position as India’s biggest source of crude in January as well. In fact, data from analytics platform Vortexa shows that India’s oil imports from Russia in February were more than the cumulative volumes supplied by heavyweights Iraq and Saudi Arabia, the second and third-largest sources of crude for India.

While India — the world’s third-largest consumer of crude oil — depends on imports to meet over 85 per cent of its oil requirement, the country is a net exporter of petroleum products thanks to its refining capacity of 250 million tonnes per annum, which is higher than its domestic demand. As a large refining hub that has ramped up purchases of discounted Russian oil, India now finds itself playing an increasingly prominent role in the global crude oil and refined products supply map.

According to a few international media reports, while the West was irked at India’s rising purchases of Russian oil in the aftermath of Moscow’s invasion of Ukraine, major Western powers like the US are comfortable with the rising supply of Indian refined products to Europe. This is mainly because, in their view, refiners in countries such as India are ensuring that the global oil and refined products market remains balanced and adequately supplied despite Russian oil and products being shunned by numerous countries. In fact, a number of experts see higher purchases of Russian oil and rising exports of petroleum products from countries like India as critical for the success of the price caps on Russian oil and refined products — imposed by G7 countries and their allies — without causing a global supply shock.

Source: The indian Express