Oil refiners in India — eager to keep importing cheap crude from Russia — are working with merchants, shippers and other middlemen to rebuild supply chains as tougher US sanctions come into effect.
Speaking on the sidelines of India’s flagship energy gathering in Delhi, executives said the existing networks were being reconfigured with selling entities, tankers and insurance providers that are not on Washington’s blacklist. Some are existing outfits that have not been impacted by the punitive measures, while others are newly created, replacing those that are now off-limits, they said.
The executives, all directly involved in the trade, asked not to be named as they are not allowed to speak publicly.
Since restrictions were first imposed, India’s heavyweight buyers, including Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, Mangalore Refinery & Petrochemicals Ltd and Reliance Industries Ltd., have splurged on discounted Russian crude. Purchases went from a negligible portion of total imports to roughly a third. All that changed in January, however, when Washington rolled out a fresh salvo against vessels and entities assisting Moscow.
Close to 160 tankers were sanctioned in that round, leaving Indian and Chinese buyers scrambling. The wind-down period offered some relief at the time, as arrivals for February were mostly spared — but not March.
State refiners and Reliance are missing a total of 18 to 20 cargoes of Russian crude for March loading, some of the people estimated — the equivalent of 20 million barrels or 14% of India’s monthly imports. The companies are still hoping to fill those gaps with Russian supplies, to avoid having to seek more expensive replacements. Indian officials have said any disruption would be temporary, but time is running short. “Imports need ships which are not sanctioned, insurance which takes time to reconfigure, and imports will need payments to go through. So each one of these has problems that need to be solved,” Oil Secretary Pankaj Jain said at the Delhi conference this week. “People are working on solving these problems,” he later added.
One of the defining features of Russia’s ability to adapt — and a major headache for sanctions enforcers — is the rapid mutation of trading entities.
Executives from state refiners said this week that brand new Dubai-based trading entities including L-Oil and Sccton have emerged in the spot market to offer Russian cargoes to Indian buyers. While the names were new, the executives said individuals and traders behind them were not.
These new iterations have come to replace firms such as Black Pearl, Guron Trading, Demex Trading, all targeted by the US sanctions in January.
