Indian refiners would likely need to tap the services of fuel traders to find new markets for their output following the European Union’s approval of its 18th sanction package against Russia.
The package specifically targets oil derivatives made from Russian crude in third countries. India is one of the largest buyers of Russian crude, and a lot of the fuels it makes from that crude end up on the European market—or so they did until last Friday.
Per Reuters, India’s Reliance Industries, the biggest buyer of Russian crude, exported 2.83 million barrels of diesel and 1.5 million barrels of jet fuel monthly to Europe in the period between January and July this year. This is going to change in six months when the latest sanctions kick in.
Things are going to change for Nayara Energy, a large Indian refiner, in which Russia’s Rosneft has a sizable stake. Nayara Energy was named specifically among entities to be sanctioned by the EU. The Indian company condemned the sanctions as “unjust and unilateral”, echoing New Delhi’s official response to the sanction package, which said the Indian government did not support that package.
Rosneft also had comments on the news, saying that “The Nayara Energy refinery is a strategically important asset for the Indian energy industry, providing a stable supply of petroleum products to the country’s domestic market. The imposition of sanctions against the refinery directly threatens India’s energy security and will have a negative impact on its economy.”
According to trading sources that Reuters spoke to, alternative markets for Indian fuels could be found in Asia or the fuels could go into floating storage in the Middle East and West Africa and get re-exported from there. This is good news for traders but not so good news for either producers or consumers—their bills are going to go up.
By Irina Slav for Oilprice.com
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