US sanction clarifications tighten squeeze on India’s February oil supplies
Indian refiners have less time than they expected earlier to receive sanctioned tankers, prompting inquiries for purchase of spot supplies from West Asian producers for February deliveries. Refiners led by Reliance Industries and Indian Oil have until Feb 27 to wind down transactions with sanctioned Russian tankers, opaque traders, a shadow fleet, and important insurers, an official from the US Treasury Department’s Office of Foreign Assets Control (OFAC) confirmed, a few days after Washington announced a fresh round of sanctions on Russian oil flows that left the market in some confusion over enforcement deadlines. The cargoes must be loaded before January 10 to evade sanction laws, the OFAC official said in an email reply to Business Standard, pointing to a clause in General Licence 120. OFAC’s General Licence 120 clarifies the winding-down date: “Except as provided in paragraph (c) of this general license, all transactions prohibited by E.O. 14024 that are ordinarily incident and necessary to the delivery and offloading of cargo involving the blocked persons listed in the Annex to this general license are authorized through 12:01 a.m. eastern standard time, February 27, 2025, provided that the cargo was loaded prior to January 10, 2025.” On payments, OFAC referred to GL 120 in a separate mail, which said that transactions were authorised through 12:01 am eastern standard time, February 27, 2025, provided that any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587. That effectively means that Russian oil cargoes on sanctioned vessels must reach India by February 20, as banks take a week to process payments, a refining official said, effectively shrinking supplies for February. Payments are getting delayed because banks are demanding the entire paper trail of individual Russian trades, officials said. Indian government officials said that Russian supplies are on track till February. But ship-tracking data and a surge in tenders for spot cargoes issued by Indian Oil and other refiners to cover for February reflect a crude oil shortfall in February. Reliance and Indian Oil did not comment on US sanctions. Russian oil supplies for February are already dropping, with arrivals estimated at below 800,000 barrels per day (bpd), according to ship-tracking data. Tanker arrivals in the first half of January averaged 1.5 million bpd, marginally higher from December, with predictions of as much as 1.9 million bpd for January, the highest since July, according to market intelligence agency Kpler. Bookings for January cargoes are made 45 to 60 days in advance. Typically, it’s early to call February, but the January 10 sanction order has led to cancellation of several tankers, industry sources said and refining data showed. More than 15 tankers which were supposed to load cargoes after January 10 for February deliveries were stranded after India rejected the cargoes.
Indian Oil Corp seeks sour oil from spot market, trade sources say
Indian Oil Corp(IOC), the country’s top refiner by capacity, is seeking to buy high-sulphur oil through spot tenders, its first sour crude import tenders since March 2022, trade sources said on Thursday. The company has also launched a separate tender seeking sweet crude, the sources said. IOC is seeking cargoes loading March 1-15. The tenders close on Thursday with bids remaining valid until Friday, they said.
India overhauls E&P regulations in a bid to raise domestic hydrocarbon production
How legislative reforms and ambitious exploration plans are transforming India into a global energy investment hotspot—and why international investors are taking notice. Global investors take notice when a nation importing more than 85% of its crude oil decides to revolutionise its energy exploration framework. India’s recent parliamentary approval of amendments to the Oilfields (Regulation and Development) Act, 1948 signals more than just regulatory change—it represents a calculated move to position the country as a premier destination for global energy investment. For international investors, this legislative reform is a strategic pivot designed to attract an unprecedented level of international capital and expertise to one of the world’s most promising energy markets under significantly improved conditions for exploration and production of hydrocarbons in a more sustainable manner. Breaking down the investment catalyst The cornerstone of India’s energy sector transformation lies in a comprehensive legislative overhaul. These amendments are not mere technical adjustments, but carefully crafted incentives designed to attract international capital and expertise. By modernising terminologies and aligning regulations with global standards, India has effectively removed all barriers to investment. For ESG-conscious investors, India presents a unique proposition The reforms address long-standing concerns of international investors, particularly regarding regulatory predictability and operational flexibility by introducing a framework that aligns with international norms, making it easier for energy companies to navigate the Indian market. For instance, the modernisation of terms like ‘mineral oils’ might seem technical, but it represents a fundamental shift in how India approaches energy sector governance. This alignment with international standards eliminates the confusion that has historically deterred potential investors and creates a framework that global energy companies can easily navigate. The numbers that matter What makes this opportunity particularly compelling is its scale. India is offering exploration blocks spanning 50,000km²—a scale that demands attention from serious players in the global energy market. More significantly, the country has opened up 99% of previously restricted areas for exploration, aiming to explore 15% of sedimentary basins by 2030. This ambitious expansion creates multiple entry points for investors of varying sizes and strategic interests. The sheer magnitude of unexplored territory, combined with India’s growing energy demand, presents a rare combination of scale and market potential. Early movers in this space have the opportunity to establish strategic positions in what could become one of the world’s most dynamic energy markets in terms of investment as well as return on investment. The right incentives The reformed regulatory framework introduces several investor-friendly features that significantly improve the risk-return profile of Indian energy investments. Key features include: – Lease term stability: Ensuring long-term visibility for planning and investment – Enhanced dispute resolution: Aligning mechanisms with international standards – Infrastructure sharing: Reducing operational costs and improving project economics – Streamlined approvals: Cutting administrative delays for faster project execution – Decriminalisation of non-compliance: Shifting focus from punishment to remediation. India’s strategy extends beyond mere regulatory reform. Additionally, the country is establishing a comprehensive ecosystem that includes: Competitive tax structures: Enhancing ROI, with specific provisions for technology-intensive projectsAdvanced technology transfer frameworks: Balancing intellectual property protection while fostering innovationRisk-sharing: Innovative risk-sharing models benefiting both large and small operators, creating opportunities for specialised players Support for enhanced oil recovery: With fiscal incentives for deploying advanced technologies Digital infrastructure integration: Simplifying operations and boosting efficiency.
U.S. Sanctions on China’s Oil Firms Are Just the Beginning Under Trump
Among the swathe of Chinese entities last week placed by the U.S. Department of Defense (DOD) on a blacklist of firms believed to be supporting Beijing’s military were several from its energy sector. Most notable of all, perhaps, were the China National Offshore Oil Corporation’s (CNOOC) international oil trading arm and the COSCO Shipping Corporation. As the DOD blacklist focuses on companies deemed a threat to U.S. national security, it should not surprise anyone that such Chinese firms are now on it. As highlighted by OilPrice.com back in the first presidency of Donald Trump, a sea-change had already emerged in China’s political and economic organisational structure following Xi Jinping’s assumption to the role of General Secretary of the Communist Party in November 2012, and then to President in March 2013. A key element of this was the increasingly pivotal role of the Communist Party in all main areas of economic and commercial management in the country. This aligned with Xi’s statement that: “Government, military, civilian, and academic, east, west, south, north, and centre, the [Communist] Party leads everything.” In practical terms, this meant that from that point board directors and company executives — including those in the energy sector — were under the standing instruction to ‘execute the will of the Party’. And as China expert Jonathan Fenby exclusively told OilPrice.com at the time: “This political-economic nexus is set to bring growing divergence from the U.S. as part of the wider agenda of the ‘national strengthening’ being pursued by Xi Jinping.” He added: “Beijing is shifting from being an economic adversary to the U.S. to a geopolitical alternative and this could result in a step change in the nature of the confrontation between the two countries.” President-elect Trump has long seen China as at minimum an ‘adversary’ rather than as a ‘competitor’ as President Joe Biden did, and this has not changed, according to senior sources in his first and current presidential team exclusively spoken to by OilPrice.com. Given the metamorphosis in the degree of interconnectivity in China’s political, economic and military elements during Xi’s rise in 2012/2013, Trump’s view appears well-founded. Even more so in one of Beijing’s national priority areas of securing its energy needs to power future economic growth. This is turn is used to expand its allied territories under the umbrella of the ‘Belt and Road Initiative’ (BRI), which in turn was always eventually aimed at enabling China to establish itself as a viable superpower alternative to the U.S., as analysed in full in my latest book on the new global oil market order. A taste of what was to come for the world’s greatest repository of oil and gas – the Middle East – came in December 2022 when former key ally of the U.S., Saudi Arabia’s Crown Prince Mohammed bin Salman, hosted a series of meetings in Riyadh between President Xi and the leaders of countries in the Arab League. This expanded upon all the key themes stated in January of that year when senior officials from the Chinese government met with foreign ministers from Saudi Arabia, Kuwait, Oman, Bahrain, and the secretary-general of the Gulf Cooperation Council (GCC). The basic theme was to forge a “deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat” — in this instance centred on the signing of a China-GCC Free Trade Agreement. The new pact pledged cooperation in just about everything a country does, including finance and investment, innovation, science and technology, aerospace, oil, gas, and renewable energy, and language and culture. Following the signing of these all-consuming cooperation agreements, Xi then identified two priority areas that he believed should be addressed as quickly as possible: first, transitioning to using the Chinese renminbi currency in oil and gas deals done between the Arab League countries and China; and second, bringing nuclear technology to targeted countries, beginning with Saudi Arabia. On the first of these, China has also long been acutely aware that as the largest annual gross crude oil importer in the world since 2017 it is subject to the vagaries of U.S. foreign policy tangentially through the oil pricing mechanism of the U.S. dollar. This view of the greenback as a weapon was reinforced after Russia’s invasion of Ukraine and the accompanying U.S.-led sanctions that followed, the most severe of which was exclusion from use of the U.S. dollar. As the former executive vice-president of the Bank of China, Zhang Yanling, suggested in a speech in April 2022, China should help the world “get rid of the dollar hegemony sooner rather than later.” The second of Xi’s announced priorities at that time caused equal consternation in Washington, as it followed the discovery by U.S. intelligence agencies that Saudi Arabia was manufacturing its own ballistic missiles with the help of China. Even more concerning was that the same intelligence agencies also found that China had been building a secret military facility in and around the UAE port of Khalifa. The subsequent advance of China’s influence across the Middle East via the mechanism of the BRI and other levers had, in the zero-sum game of superpower supremacy, marginalised the influence of the U.S. and its allies in the former key cooperative states of Saudi Arabia and the UAE. It had also cemented existing opposition to it in Iran, Iraq, and Oman, among others, as detailed in full in my latest book on the new global oil market order. Crucially for Trump’s second term as president that begins on 20 January, China has yet to fully recover economically from its disastrous three years of Covid, which is constraining its ability to reach the finish line in the superpower race. As a senior source who works closely with the new presidential team exclusively told OilPrice.com recently: “China’s finances are failing [with struggling economic growth], Russia’s military has failed [in Ukraine and Syria], Iran’s proxies have been incapacitated [Hezbollah, Hamas, Houthis et al], North Korea is on the sidelines, and now Trump is back.” The
India rushes to pay for Russian oil ahead of sanctions cutoff
India’s state refiners are rushing to speed up payments for Russian crude, hoping to complete their trades before a dramatic expansion of Washington’s curbs on Moscow’s oil industry effectively comes into force next month, people familiar with the matter said. Pressure to stay clear of sweeping US sanctions means the refiners are now aiming to settle payments for the discounted barrels in just two days instead of the previous five, said the people, who declined to be named as the discussions are private. The fate of at least 4.4 million barrels of Russian crude currently on their way to Indian ports hangs in the balance. At least six sanctioned tankers have loaded different grades and are sailing toward ports including Jamnagar, Chennai, Paradip and Visakhapatnam, and are due to discharge at these ports before the wind-down period ends, according to ship-tracking data from Bloomberg and Kpler. The Mercury is expected to reach Paradip in eastern India this weekend, one of the earliest vessels to arrive. It is hauling more than 1 million barrels of Urals from Russia’s Sheskharis terminal, loaded in mid-December. Two sanctioned tankers discharged more than 1.4 million barrels at Indian ports in the state of Gujarat on Jan. 12, according to Kpler data. The Zaliv Amurskiy unloaded Urals at Jamnagar, while the Arjun delivered to Vadinar. Indian banks — increasingly cautious in expectation of tougher measures from Washington, even before Friday’s announcement — have been demanding additional paperwork since late last year, undertaking name screening and tracking incoming shipments. They are now ready to settle the payment on the basis of the bill of lading, the people said. Banks have also stopped processing payments in US dollars, to avoid having to adhere to the $60-a-barrel price cap on Russian crude set by Western nations in 2022. All payments for cargoes from Gazprom Neft PJSC, sanctioned on Friday, are being settled in rubles, the people said. The US Office of Foreign Assets Control has set a deadline of Feb. 27 for the delivery of all crude cargoes that were loaded on sanctioned vessels prior to Jan. 10, the day sanctions were made public — a “wind down” period that Indian buyers are keen to make the most of. India gets about a third of its oil imports from Russia. Government concerns with containing inflation have made the discounted crude particularly attractive, crowding out India’s more traditional counterparties. The latest round of sanctions — targeting two large producers, as well insurers, traders and more than 180 vessels — have put that cheap supply at risk.
OPEC, IEA to launch reports on India’s oil & gas sector at IEW 2025
he India Energy Week (IEW), government’s annual flagship oil and gas sector conference, will witness top international agencies such as OPEC and the International Energy Agency (IEA) launch their oil and gas reports on the world’s third largest energy consumer. The development indicates India’s growing importance as an energy consumer. At IEW 2024, the International Energy Agency (IEA) has launched a report on the oil outlook till 2030 in the world’s third largest energy consumer. The IEW 2025, which is scheduled to take place in New Delhi from February 11 to 14, is expected to witness participation from more than 20 Energy Ministers and Deputy Ministers representing advanced economies, largest energy producers, and key nations of global south. The event will also feature heads of leading international organisations and 90 CEOs from some of the world’s largest Fortune 500 energy companies including BP, TotalEnergies, QatarEnergy, ADNOC, Baker Hughes and Vitol. “IEW 2025 offers a platform where global stakeholders can freely exchange ideas, explore opportunities, and witness India’s leadership in navigating complex energy transitions. As a springboard for collaboration on key energy projects, including green hydrogen technologies, solar innovations, or advanced exploration techniques, this event represents a crucible of global energy innovation,” Oil Secretary Pankaj Jain said. Besides, the event will see OPEN launching the India oil demand report, while the IEA will launch a report on India’s natural gas sector.
US ban on Russian oil may not have instant impact
The recent sanctions imposed by the US on the Russian oil are unlikely to have an immediate or direct impact on India’s oil supply. Any major effects are expected to be felt in next two months, as per a senior official in the petroleum ministry. The official said, on condition of anonymity, the worst-case scenario of the sanctions on Russian crude would be that India will no longer receive discounted or cheaper crude and will have to purchase crude at the market price. “In the next two months, we don’t see major problems. It is too early to say,” said the official. The US imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegas on Friday, along with 183 vessels. The purpose of sanction is to disrupt revenue stream Moscow uses to fund its war with Ukraine. Many of these tankers have been used to ship oil to India and China, as Western sanctions and the price cap imposed by the Group of Seven (G7) countries in 2022 shifted flow of Russian oil from Europe to Asia. Some of the vessels carry oil from Iran, which is also under sanctions. However, the official maintained that he was hopeful that within next two months, new market dynamics would evolve. Indian refineries will study the market and subsequently buy crude from wherever they can get it at the cheapest price. The official said there would be no disruption as oil supply is not a concern and there are sufficient alternative suppliers. He pointed out that any shortfall in supply could be addressed by OPEC, which has spare capacity. Outside of OPEC, countries like Guyana, the USA, Canada, Brazil, and Suriname could step in to meet India’s needs. As per the official, while one of the sanctioned entities was not a major supplier to India, the other supplied a major amount of crude. “There will certainly be disruption, but it will not be immediate. This is because there is a transit period. For example, cargo already in transit will still reach us. The key is to have a window of six-eight weeks, during which current shipments can arrive. This six-eight week period provides time for buyers and producers to find solutions. It is possible that a producer might be willing to sell at a discounted price,” the official added.
Indian Gas Exchange plans to offer 3-6 month contracts
The Indian Gas Exchange (IGX) has sought regulatory approvals to launch 3-6 month gas contracts benchmarked to international gas prices, its chief executive Rajesh Kumar Mediratta said. IGX currently allows gas suppliers to sell the fuel on the exchange for durations ranging from daily, weekly, fortnightly and monthly. It also offers intraday trading at a fixed price. Mediratta said the exchange has applied to the regulator, Petroleum and Natural Gas Regulatory Board (PNGRB), for permission to launch three-month and six-month delivery contracts indexed to gas benchmarks such as FIXI and Platts JKM, WIM and Dated Brent. “We are awaiting a clearance from PNGRB,” he said. The new long-duration contracts will have a payment cycle of a fortnight compared to the current system of payments being made in 2-3 days after delivery. Also, IGX is looking to introduce green certificates for trading, he said, as the government looks to make the usage of 1 per cent compressed biogas (CBG) mandatory for city gas sellers. “Where city gas retailers have supplies coming from CBG plants, meeting the obligation of having 1 per cent CBG in the gas they supply will not be a problem. But in places where they dont have CBG supplies, they can buy these certificates,” he said. He said, gas volume traded on the exchange crossed 1 billion cubic meters (4 crore million British thermal units) in the first nine months of the current fiscal year. This volume equals 4.1 crore mmBTU volumes traded in full 2023-24 fiscal (April 2023 to March 2024). IGX has also signed a MoU with Austria’s Central Europeans Gas Hub to explore gas trading opportunities, including those for green gases such as hydrogen and methane. “This partnership aims to strengthen India’s gas market by leveraging CEGH’s European market expertise and IGX’s deep-expertise in the Indian gas market,” he said. Key focus areas of the MoU include trading of natural gas and renewable gases like hydrogen, biomethane, and e-methane, commodity-related certificates, market development, training programs and gas-hub operations. A key objective of the partnership is to collaborate on best practices for the operations of natural gas trading focusing on enhancing the technical, operational and regulatory capabilities. Insights from the Indian and European gas markets will be utilized and international best practice will be shared, facilitating the creation of a liquid and transparent gas market. IGX and CEGH also plan to explore the development of trading platforms for emerging green gases like hydrogen, biomethane (including green gas certificates). Both parties will also work together to support gas hub operations in India, he said. “This partnership will enable us to co-develop innovative solutions for natural gas and renewable gas trading, strengthen market efficiency and enhance energy security,” he added.
Fresh US sanctions on Russian oil to disrupt Indian imports, may end price discounts, says top official
Fresh sanctions slapped by the US government on Russian oil will start impacting Indian imports of the commodity after the wind-down period expires in two months, a top government official said. The emerging scenario may also lead to a cessation of price discounts on Russian oil in “the worst-case scenario,” the official said. On Friday, the outgoing Biden administration imposed new sanctions on Russian oil producers Gazprom Neft and Surgutneftegaz and about 180 tankers ferrying Russian oil. The latest measures by the US government mean anyone buying oil from Gazprom Neft or Surgutneftegaz or getting oil delivered by sanctioned tankers will attract secondary sanctions. So far, US sanctions on the Russian energy sector have been milder and did not trigger secondary sanctions on India or other buyers of Russian oil. Sanctioned buyers of Russian oil will find it hard to make dollar payments for anything, raise funds in the US, and do business with American companies. Gazprom is a significant Russian supplier to India though Rosneft is the largest. Supplies from Surgutneftegaz are negligible. Indian refiners depend a lot on traders for Russian supplies; therefore, sanctions on tankers are more consequential than those on Gazprom. The new sanctions provide buyers a wind-down period until March 12 for completing the deals already struck. “Definitely, there will be disruption. That disruption will not be visible today or tomorrow,” said the official, asking not to be named, referring to the wind-down period. In the “worst-case” scenario, discounts available on Russian oil since the beginning of the Ukraine war will vanish, the official added. A plausible scenario can be that Russian oil, which is not affected by the latest sanctions will start getting sold at below the G7 price cap of $60 per barrel and get access to Western shipping and insurance, the official said, adding that the market may “find a way to get the oil to us.” “The market is still digesting what it actually means,” said the official, adding that the full impact will hinge on many factors including the return of Donald Trump to the White House next week, Moscow’s response, and the market reaction to the sanctions. Indian refiners are already looking for alternative supplies to make up for possible disruption in Russian supplies after March 12, the official said. Indian refiners buy Russian crude from the spot market. Reliance Industries is learnt to have recently struck an annual deal to source Russian crude from this year. The official said spot buyers will quickly switch to alternatives while term deal purchasers will have the option to modify volumes or enforce force majeure. He noted that crude prices, which have gained about $5 to cross $81 per barrel in a week, are not sustainable as there is ample spare capacity available globally. Additional supplies from the US, Canada, Brazil and Guyana can help mitigate any supply disruption from Russia even if members of the Saudi-led grouping OPEC do not utilise their 3 million barrels per day of spare capacity, the official said.
Indian Refiners Cease Trade with U.S-Sanctioned Russian Tankers
India’s refiners have stopped doing business with the Russian tankers and companies sanctioned by the U.S. on Friday, a source at the Indian government told Reuters on Monday. The outgoing U.S. Administration last week imposed the most severe sanctions on Russia’s oil yet, designating two major Russian oil companies, Gazprom Neft and Surgutneftegas, as well as 183 vessels, dozens of oil traders, oilfield service providers, insurance companies, and energy officials. It is believed that a quarter of the Russian shadow fleet has now been sanctioned. Despite the hefty sanctions, India expects its flows of crude from Russia not to be disrupted until March as the sanctioned tankers will be allowed to discharge until then, a senior Indian government official told Reuters on Monday. India will allow cargoes carrying Russian oil booked before the sanctions were announced on January 10 to discharge at ports when they arrive at Indian coasts, according to the official who spoke on condition of anonymity. India doesn’t expect major disruptions during the two-month wind-down period until March. But “Going forward, it’s early days yet to anticipate the impact, how discounts shape up, if somebody is willing to sell below the $60 price cap,” the Indian government source told Reuters. “When it comes to buyers, China and India, in general, tend to steer clear of dealing directly with tankers and entities blacklisted by the US Treasury,” Matt Wright, lead freight analyst at Kpler, wrote in a note on Friday. The newly sanctioned tankers handled about 42% of Russia’s total seaborne crude exports. Over half of this volume was shipped to China, making up about 61% of China’s seaborne imports of Russian oil. Meanwhile, most of the remaining exports went to India, contributing to nearly a third of the South Asian nation’s total intake of Russian oil, according to Kpler’s analysis. Even before the Friday sanctions, India and China had started to procure more crude from sources other than Russia and Iran, in view of the tightening U.S. sanctions on Russia and an expected clampdown on Iran’s oil exports from the incoming Trump Administration.