India as an Emerging Energy Supplier to the EU: Major Factors

Since the beginning of the Russia-Ukraine struggle in February 2022, vitality commerce (particularly oil) between Russia and India has elevated unexpectedly. Earlier than the start of the struggle, India’s share of Russian oil imports was just one % of its whole oil imports. However in a single yr, the share of Russian oil in India’s whole imports elevated to 35 %, making India the third largest purchaser of Russian crude oil after China and the USA. 

By the top of April 2023, India turned the largest vitality provider to European international locations. India’s rise to such place coincides with low-cost Russian vitality provide and the environment friendly function of oil refineries equivalent to Indian Oil Company (IOC), Bharat Petroleum Firms Restricted (BPCL) and Nayara vitality. Exporting refined oil to Europe, as an example, at a larger quantity than even Saudi Arabia. The three contributing elements to this phenomenon embrace the Russia-Ukraine struggle and extra and low-cost provide of Russian oil to India, EU sanctions and value caps on imports of Russian oil, and environment friendly Indian refining corporations.

For the reason that early days of the struggle, India’s oil import from Russia at a relatively low-cost value has elevated by 1,350%. The sudden improve within the Russian vitality provide to India helped each international locations. For Russia, it helped proceed the struggle in opposition to Ukraine and India whereas saving substantial overseas reserves. The excess Russian vitality provide enabled India to export vitality to the resource-hungry European nation, which was dealing with an vitality disaster after the beginning of the struggle.

Inside a yr, India’s oil imports from Russia elevated from 30.85 lakh tonnes to 55.9 million tonnes. After the sanctions and value caps have been imposed, India exported the utmost quantity of imported Russian oil to Europe. India is solely refining Russian oil and exporting refined oil to the European market. After shopping for low-cost Russian oil, these international locations refine and promote it to Europe and are referred to as  ‘Laundromats’. Nevertheless, India has been criticized for exporting clear oil to the EU by cleansing the filth of Russia.

The third issue is India’s oil refining business, which is taken into account the world’s largest oil refining business and might refine greater than its vitality demand. India’s oil reserve capability is minimal and cannot be reserved for over a month. In such a situation- the place Indian refining corporations are receiving low-cost vitality provide, which reduces refining costs- the function of Indian refining corporations in rising the export of petroleum merchandise utilizing the surplus provide is commendable and helpful for the Indian economic system. Surprisingly, India has left behind Saudi Arabia within the clear oil export to the EU. For the EU, the import of Russian oil via Indian refinineries is a double-edged sword.  On the one hand, the EU requires various supply of oil and one the opposite hand it struggles for the ben on the availability of Russian vitality. Nevertheless, the vitality (oil) commerce between the EU and India is authorized beneath EU sanction but in addition criticised by EU’s chief diplomat Josep Borell  and demanded on Might 2023 to crack down on India reselling Russian oil into Europe.

India has saved 35 thousand crore rupees in a single yr by shopping for low-cost oil from Russia. Alternatively, it has additionally efficiently constructed its place as a serious provider of petroleum merchandise. Little question, India has benefitted from its refining business, it’s onerous to anticipate that India will remian a bigger vitality provider to the EU after the top of the Warfare because it appears to have a short-term functionality. After the top of the struggle, India might free the value low cost over the Russian imported vitality that might cut back India’s vitality exporting standing to the EU. Nonetheless, it has additionally tarnished India’s standing to some extent. India has been blamed for supporting Russia by importing low-cost Russian oil, not directly serving to Russia to scale back impression of the sanction. Nayara vitality which is owned by Rosneft (a Russian oil firm) has beneffited immensely from Russia’s low-cost vitality provide to India. Furthermore, the vitality commerce in Ruble and Rupees additionally helped Russian foreign money to recuperate from sanctions.

On this modified geopolitical state of affairs the place the EU badly wants vitality provide, India appears taking part in a big function in world and European vitality market by supplying vitality. Therefore, ongoing Russia-Ukraine struggle, low-cost Russian oil provide and  geopolitical benefit have made India a brief largest vitality provider to the EU.

[Photo by Indian Oil Corporation, via Wikimedia Commons]

Pramod Kumar is a PhD Analysis Scholar at ‘Centre for Russian and Central Asian Research (CRCAS)’, Faculty of Worldwide Research (SIS), Jawaharlal Nehru College, New Delhi. He publish graduated in Political Science with Worldwide Relations from Division of Worldwide Relations, Jadavpur College, Kolkata. The views and opinions expressed on this article are these of the writer.