‘A whole lot of factors’ will decide on Russian oil import to India: Finance minister
Union finance minister Nirmala Sitharaman on Wednesday at a media interaction in the city said that a “whole lot of factors” will decide on import of Russian oil to India. While not suggesting that the country is averse to importing Russian oil, amid the Western countries economic sanctions and crude oil import bans due to the ongoing conflict between Ukraine and Russia, Sitharaman said over the last two to three days Russia has been making an open offer to supply its surplus oil at a discounted price. “There was an open offer over the last two-three days that Russia was giving it (crude oil) at some sort of discounted price but we don’t know how it can be of effect because a whole lot of factors will have to be weighed-in and we will have to get it from some port to ship it and then whether it can come to India, and whether it is workable…” she said. Sitharaman stressed the requirement of insurance for consignments if India does strike a deal with Russia to import oil to offset the rising price of crude due to the conflict. “Because these are consignments which should have adequate insurance cover. Do they get the insurance or not? The nitty-gritties, if at all it can be worked out, need to be worked out. However, the minister concerned is fairly seized of the matter andI have been in touch with him,” said Sitharaman. Meanwhile, the full blown war between Russia and Ukraine has also created a crisis scenario over import of sunflower oil, which is predominantly imported by India in large quantities from Ukraine. “The government has already started looking from other places where, if not sunflower oil, any other oil which can come into India and is used in India,” she said, adding that it may prove to be a challenge that needs to be addressed due to the war.
‘A whole lot of factors’ will decide on Russian oil import to India: Finance minister
Union finance minister Nirmala Sitharaman on Wednesday at a media interaction in the city said that a “whole lot of factors” will decide on import of Russian oil to India. While not suggesting that the country is averse to importing Russian oil, amid the Western countries economic sanctions and crude oil import bans due to the ongoing conflict between Ukraine and Russia, Sitharaman said over the last two to three days Russia has been making an open offer to supply its surplus oil at a discounted price. “There was an open offer over the last two-three days that Russia was giving it (crude oil) at some sort of discounted price but we don’t know how it can be of effect because a whole lot of factors will have to be weighed-in and we will have to get it from some port to ship it and then whether it can come to India, and whether it is workable…” she said. Sitharaman stressed the requirement of insurance for consignments if India does strike a deal with Russia to import oil to offset the rising price of crude due to the conflict. “Because these are consignments which should have adequate insurance cover. Do they get the insurance or not? The nitty-gritties, if at all it can be worked out, need to be worked out. However, the minister concerned is fairly seized of the matter andI have been in touch with him,” said Sitharaman. Meanwhile, the full blown war between Russia and Ukraine has also created a crisis scenario over import of sunflower oil, which is predominantly imported by India in large quantities from Ukraine. “The government has already started looking from other places where, if not sunflower oil, any other oil which can come into India and is used in India,” she said, adding that it may prove to be a challenge that needs to be addressed due to the war.
Reliance Industries stepping in to supply diesel-starved Europe
The global energy crunch spurred by Russia’s invasion of Ukraine is giving the world’s biggest refining complex a much-needed boost. Reliance Industry’s Jamnagar facility is lifting crude processing and deferring planned maintenance to take advantage of surging demand for diesel, according to people with direct knowledge of the matter. RIL is already sending shipments of the fuel to Europe, and this will increase in the coming months, said the people who asked not to be named as the information isn’t public. The complex in Gujarat can process 1.36 million barrels of crude a day from two refineries and is able to export most of the fuel. Owned by billionaire Mukesh Ambani, the 704,000 barrels a day export-focused plant been languishing since the pandemic hit, and only utilized around three-quarters of its capacity in January. “Reliance has large flexibility in terms of crude feedstock ratio and yield shifts, and it exports 80% of its output,” said Senthil Kumaran, head of South Asia oil at industry consultant FGE. “That gives it the maximum benefit in strong margin times.” Reliance shares rose as much as 4.3% in Mumbai. A spokesperson for the company didn’t immediately respond to an email seeking comment. Some Asian refiners are looking to send diesel abroad as the fuel skyrockets in Europe following Russia’s invasion of Ukraine. Prices there have risen to a premium of as high as $139 a ton over those in Asia, compared with less than $10 for most of last year. Some processors like Reliance are well-positioned to take advantage of the so-called arbitrage trade, but others are struggling with the surging costs for oil and are considering run cuts. Reliance had planned to shut one of the crude processing units at Jamnagar for about three weeks starting this month, but that’s now been postponed to September, the people said. The export-focused unit utilized only 74.7% of its capacity in January, data from India’s oil ministry show. Nayara Energy, 49% owned by Russia’s Rosneft Oil Co, also operates a refinery in the Jamnagar area and exports fuel, although in much lower volumes than Reliance. The big state-owned processors, such as Indian Oil Corp, are more focused on the domestic market. India has so far avoided condemning the invasion of Ukraine and has been abstaining from voting at the United Nations to denounce Vladimir Putin’s aggression. It hasn’t taken part in any sanctions against Moscow and has been urging Russia and Ukraine to hold talks to ease the situation. State-owned upstream explorer ONGC Videsh said earlier this month that it didn’t foresee any challenge in selling crude produced in Russia’s Sakhalin-I project, even after its operator Exxon Mobil began taking steps to wind down operations before eventually exiting its stake in the development
No need to panic. Oil prices could drop to $100 a barrel in two weeks: Arun Kumar Singh Chairman & MD, BPCL
The current oil surge wouldn’t last and prices are likely to drop to $100 per barrel within two weeks, Bharat Petroleum Corp (BPCL) chairman has said, adding that there was no need for India to panic. “Russian oil and gas exports are not going to be blocked unless Russia itself decides to do so, which is unlikely,” BPCL chairman Arun Kumar Singh told ET. He said Europe is also unlikely to stop importing energy from Russia, one of the world’s largest exporters of oil and gas. Crude oil prices soared to $139 per barrel on Monday after US Secretary of State Antony Blinken said the US and European allies are considering banning the import of oil from Russia. Prices eased a bit after Germany, the biggest consumer of Russian crude in Europe, rejected any such plan. Russia has warned that rejection of its oil would be “catastrophic” for the global oil market and prices could rise to $300 per barrel. Oil is up nearly $30 per barrel since Russia launched the invasion of Ukraine and is currently trading around $127. BPCL’s Singh said oil prices would give up the recent speculative gains quickly and fall to $100 per barrel in two weeks. It can fall further to $90 once the war concludes, he said. “There is no need for us to panic. We should just weather it out,” Singh said, adding that the prices were unsustainable. “World cannot afford the current prices. The global economy will slow down and there will be a correction in demand for crude,” Singh said. Sustained high prices can destroy 2-3% of global oil demand, which is about 2-3 million barrels per day, he said. This compares with Russia’s export of 5 million barrels per day of crude. The contract for two Russian oil cargoes for April delivery to BPCL is being honoured, signalling an absence of supply issue, Singh said. BPCL sources Russian cargoes from the spot market. Indian refiners usually source 30-40% from the spot market and the balance under long-term deals with producers. They also usually keep at least a month of inventory. Crude is already lined up for processing in April, Singh said. Add to this a month of inventory and refiners are safe until May in terms of their crude needs. State-run refiners need to increase domestic fuel prices by Rs 12-15 per litre to align them with international rates after keeping them static for more than four months due to assembly elections in five states, according to industry sources. With the conclusion of voting, prices are expected to go up. The hikes will likely be gradual as companies may want to guard consumers against the volatility in the international market. Economists fear a full pass-through of fuel costs could ratchet up inflation and inflationary expectations, hurting the economic recovery.