Home » Business » There is growing concern that India is the “back door” to Europe for Russian oil. What tactics are used to hide the origin of crude oil

There is growing concern that India is the “back door” to Europe for Russian oil. What tactics are used to hide the origin of crude oil

The huge blue and red hull of SCF Primorye entered the port of Vadinar, in the western Indian state of Gujarat, earlier this month. The 84,000-ton tanker, built in 2009 and sailing under the Liberian flag, had arrived from the port of Ust-Luga, a settlement in Russianear the border with Estonia.

Until 2017, the Vadinar oil refinery was controlled by Essar – the Indian owner of the Stanlow refinery in Ellesmere Port. Since then, a consortium that includes the sanctioned Russian state oil company Rosneft and the 24.5% stake in goods merchant Trafigura have owned Nayara Energy, which runs the refinery.

The arrival of the tanker came while India intensifies imports of Russian oil. The willingness of the Asian nation to buy Russian crude oil with discounts of up to 30% has undermined efforts YOUREurope and the United Kingdom to exhaust his war chests Vladimir Putin by reducing imports. Russia received $ 20 billion in oil exports in May, returning to pre-invasion levels. Now, there are concerns that India is being used as a potential back door in Europe for the supply of Russian oil, given the significant increase in imports, notes The Guardian.

Prior to the invasion of Ukraine, India’s imports of Russian oil were negligible due to high transportation costs. But recently, Russian oil imports to India have risen. Vadinar owner Nayara bought Russian oil in March – just before the introduction of international restrictions on its exports – after a one-year hiatus, buying about 1.8 million barrels from Trafigura, Reuters reported.

The volumes that India buys and exports, however, suggest that some of the refined Russian crude oil can eventually be used in gas stations in Europe. It is not clear where the Russian crude oil brought to Vadinar on SCF Primorye will be used. Vadinar’s owner declined to comment on whether or not he was transporting Russian oil to Europe.

In May, India imported about 800,000 barrels of oil a day from Russia, and the rating agency Fitch predicts that imports could soon increase to one million barrels a day, or 20% of India’s total imports.

Putin told the Brics business summit (BrazilRussian, Indian, China and Africa South) last week that “Russian oil reserves to China and India are growing significantly.”

India’s 1.4 billion people give the government reason to look for cheap supplies. But it is a dangerous political game. “India is on the ropes,” said Alan Gelder, vice president of refining, chemicals and oil at Wood Mackenzie. “If you take too much, you don’t want the West to sanction the rest of your economy.”

The Clean Energy and Air Research Center said Gujarat’s Jamnagar refinery received 27% of its oil from Russia in May, up from 5% in April. The center said about 20 percent of the goods exported from Jamnagar went to the Suez Canal, indicating they were heading to Europe or the United States. Deliveries were made to France, Italy and UK. However, there is no evidence that these shipments include Russian oil.

State oil processors are trying to secure six-month supply contracts for Russian oil to India, Bloomberg reported this month. The trio of state-owned refineries – Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum – declined to answer questions about whether they imported Russian oil or exported it to Europe.

Industry sources say tracking Russian oil shipments to Europe via India is proving very difficult. “You will find that more shipments of oil will reach a port in different countries and will be mixed. Tracking a hydrocarbon is virtually impossible. “

There are several tactics that shippers use to hide the origin of Russian oil. From a financial point of view, payment in Chinese currency – rather than in the industry standard dollar – is an option. Ruble-yuan trading volume has increased by 1.067% since the February invasion of Ukraine. Shipments of oil cargo from ship to ship have also increased, suggesting that oil is being shifted from Russian-flagged ships to other ships. An increasing number of ships have gone into hiding by shutting down their automatic identification systems as thousands of gallons are transferred in waves.

A third, more niche option for hiding Russian transactions is to eliminate the use of a currency and trade oil directly with other products, such as gold, food or weapons. Iran has previously received payments from trading partners in gold and not in dollars.

“If a country or an oil operator wants to hide the source of crude oil or oil products, it can do so very easily,” said Ajay Parmar, an oil market analyst at ICIS.

Oleg Ustenko, the chief economic adviser to the president Volodymyr Zelensky he told The Guardian: “We call on countries everywhere to show solidarity with Ukraine, rejecting Russia’s bloody oil. But let’s be clear, the British and European energy, shipping and insurance companies that help Putin complete this pivot to new markets out of pure greed are complicit in his war crimes.

“European leaders must take sanctions regimes seriously and ban not only the import of Russian fossil fuels, but also heavily tax their trade, otherwise the tragedy in Ukraine will continue and even spread.”

For Indian Prime Minister Narendra Modi, trade with Russia remains an act of political balance. While oil prices remain high and there is pressure on consumers at the pump, the risk of a Western reaction will be weighed against the cost of cheap oil.

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