Page 5 - AsianOil Week 18 2022

AsianOil COMMENTARY AsianOil

buyers over potential supply deals. to circumvent. However, new partnerships
According to one of the sources, the volume between Indian and Russian companies could
and duration of the deals could change depend- extend beyond refiners buying crude, including
ing on the extent of discounts offered, and the through a potential takeover of stakes or pro-
impact of sanctions. jects being abandoned by Western oil and gas
companies.
Challenges According to a separate Reuters report from
Indian buyers will have to proceed carefully last week, the Indian Ministry of Petroleum and
given the current sanctions regime. Reuters’ Natural Gas has spoken with ONGC Videsh
sources said supplies could be delivered through Ltd (OVL), IOC, Bharat Petro Resources Ltd
non-sanctioned intermediaries and trading (BPRL), HPCL subsidiary Prize Petroleum, Oil
companies based in countries that have not India Ltd (OIL) and GAIL (India) about the
imposed sanctions on Moscow. possibility of acquiring BP’s stake in Rosneft.
Thus far since the start of the war, India’s refin- This comes after the UK-listed super-major
ers have been buying Russian oil from trading announced its intent to exit its Russian invest-
companies on a delivered basis. However, major ments in February.
traders Vitol and Trafigura are winding down The ministry is also reported to have asked
Russian oil purchases in anticipation of new EU OVL to consider buying ExxonMobil’s 30%
sanctions taking effect from May 15. stake in the Sakhalin-1 project in Russia, in Indian media
Separately, Indian media reported that Russia which it already owns 20%. ExxonMobil is exit-
and India were exploring alternative payment ing its stake in Sakhalin-1, but as the operator reported that
mechanisms in a bid to circumvent sanctions. of the project, it has warned that its withdrawal Russia and India
And according to sources cited by Bloomberg needs to be carefully managed.
last week, Russia has offered India a dual-pay- As with Russian oil, Indian companies may were exploring
ment mechanism that would allow for more be interested in buying stakes in Russian assets
trade to be carried out in local currencies. at discounted rates given the current circum- alternative
The sources said the latest offer from Russia stances. However, one of Reuters’ sources
involved payment for Indian oil imports from warned that Indian players had yet to start due payment
Russia in US dollars or euros while the rest of the diligence processes and would need to study the mechanisms in a
trade between the two would be settled using impact of sanctions closely in order to assess the
a rupee-ruble-denominated mechanism. How- risk of investments becoming stuck in Russia. bid to circumvent
ever, no final decision on how to proceed with This comes after ExxonMobil’s Russian unit
payments had been taken as of May 1. declared force majeure on its Sakhalin-1 oper- sanctions.
ations last week, owing to sanctions making it
Stake for sale increasingly difficult to ship crude out of Russia.
While India will be keen to maintain relations While the super-major is in the process of with-
with Russia over the longer term, it seems drawing from Russia anyway, the force majeure
likely that the country’s refiners will be open illustrates the challenges that foreign investors
to changing their position if the discounts on in Russian oil and gas assets could face. India
offer shrink or sanctions become more difficult will have to proceed with caution.™

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