The Journal quoted shipping and trade data to say import of Russian crude by Indian refineries has shot up to 800,000 bpd (barrels per day) from 30,000 bpd before the Russia-Ukraine conflict began. This is because of deep discounts of $35 per barrel, particularly on the popular Urals crude.
The Journal said the refineries are processing this crude and exporting petrol, diesel and chemicals such as alkylate, which is used to boost octane levels in petrol, to the US and Europe as they shun Russian products. It said traders and shippers are opting for high-sea transfers to obfuscate the origins of crude brought from Russia.
The report mentions a ship chartered by Reliance Industries Ltd (RIL), India’s largest private refiner that runs the world’s largest refinery complex at Jamnagar in Gujarat, sailing from nearby Sikka port with a cargo of alkylate without mentioning a destination. The ship updated its destination to a US port three days later and delivered the cargo in New York, the journal said.
A Reliance spokesperson was not immediately available for comment. Other industry executives described the report as a “hit job” on the world-leading Indian refining industry and pointed out there is no sanction on Russian oil and gas.
India depends on imports for 85% of oil and 60% of gas. Its current consumption stands at nearly 5 million barrels a day. It is the fastest-growing energy market in the world, with fuel consumption growing 5-6% annually. The country has a string of highly capable refineries with an aggregate capacity of 250 million tonnes per annum, which is being expanded to 335 million tonne by 2035 to meet the expected expansion in demand.
On ship-to-ship transfers, the executives said it is driven by arbitrage and a common practice where cargoes are diverted to the benefit of traders and refiners. “Savings of even a few cents per barrel results in huge savings, given the volumes,” one executive of a refining company said requesting anonymity.
Another executive pointed out that state-run refineries too have bought discounted spot cargoes of Russian oil from traders through tenders since the conflict. “The government has made it amply clear that as an import-dependant country, India will put its energy security interests at the forefront and source energy from wherever it is available at an economical price,” he said.
RIL has been importing Russian oil for the last 3-4 years as has been the Rosneft-owned Nayara, India’s second private sector refinery. RIL set up an alkylate unit at its export refinery more than a decade back to be able to make petrol suitable for exporting to markets such as California that have more stringent fuel standards. It has been exporting the chemical for a decade, the executives pointed out.
On the ship incident mentioned by the Journal, the executives said the vessels are chartered and once they set said with the cargo, the companies have very little say except to see that the delivery is made on time. Many times, the ships head for the high seas and get their destination a few days later.