Page 6 - FSUOGM Week 18 2022

FSUOGM COMMENTARY FSUOGM

Making a shift in direction of this magnitude crude exports in order to obfuscate their origin,
would present extraordinary challenges for as Venezuela has been doing in Asia for several
all of the parties involved. Finding the tankers years.)
needed to move the oil would be difficult. Find-
ing the credit needed to finance the deals (and Sanctions: not 100% effective
the banks to handle the transactions, especially It seems likely, then, that Russia will use these
now that Russian access to capital markets has tried-and-tested techniques (when it can get
been restricted) would be difficult too. Finding away with it) to keep at least some of its crude
the incentives needed to convince potential buy- oil moving into Europe. It already knows how to
ers to ignore pressure from the West to join the do so, and it has an incentive to keep serving its
sanctions regime might also be difficult. European customers (and avoid the headache of
What’s more, Russia already has plenty of an abrupt shift to Asia) if it can.
practice with respect to finding ways to work At the same time, the EU will also have incen-
around the limitations imposed by embar- tives not to work too hard to enforce sanctions,
goes. For example, state-owned Rosneft spent assuming that it does adopt them. It will be
enough time helping Venezuela’s national oil motivated by the desire to assuage the concerns
company (NOC) PdVSA to find creative new of member states that lack easy alternatives to
ways to export crude to China and other mar- Russian oil supplies – including those such as
kets in Asia despite that under US sanctions Hungary and Slovakia, which may be granted
Washington actually blacklisted two of its sub- exemptions from the ban. It will also be moti-
sidiaries, Rosneft Trading SA and TNK Trading vated by the desire to stave off the social and
International, in February 2020. Rosneft has economic disruption that might follow energy
also used some of the same tricks noted lately shortages. And in the end, it might also be moti-
in the Mediterranean – according to a Bloomb- vated simply by the lack of political will to take
erg report from November 2019, which noted the kind of action needed to chase down every
that a tanker chartered by the Russian company European company with direct or indirect ties to
had switched off its transponder upon entering Russia’s oil sector.
Venezuelan territorial waters in order to obscure In any event, even with sanctions, the EU will
its activities. (Russia also seems to be very famil- continue to import some Russian crude – less
iar with the practice of blending and relabelling than it has been doing, but some. ™

India seen increasingly

pivoting to Russia

New Delhi appears to be turning to Moscow to procure oil, even as other countries step up sanctions

INDIA appears to be increasingly pivoting Among the reasons for India’s position is the
towards Russia for oil supplies – at least in the fact Russia is its largest arms supplier and it does
WHAT: shorter term as it seeks to capitalise on dis- not want to strain their relations. In addition, the
India is increasingly counted crude being offered by Moscow. In country is seeking to capitalise on the availabil-
looking to Russia for oil, recent days, it has emerged that India is report- ity of discounted Russian crude at a time when
in contrast to Western edly in talks over a six-month deal to import oil crude prices remain above $100 per barrel. And
countries. from Russia. There is a possibility that the pivot Moscow appears to be happy to offer cheap
could prove longer-lasting, as according to sep- crude to India under the current circumstances.
WHY: arate reports, New Delhi has asked state-owned
Russian oil is selling at oil companies to consider buying the stake in Increased imports
a discount and Indian Russia’s Rosneft that is being abandoned by BP. The Asian country’s oil imports have been on the
refiners are keen to This comes as Russia’s war in Ukraine, which rise in the wake of the war in Ukraine. Accord-
capitalise on this.
started in February, shows no sign of coming to ing to recently released data, India’s oil imports
WHAT NEXT: an end. In response, numerous countries, mostly between April 2021 and March 2022 were up
New Delhi is reported to in the West, have imposed sanctions on Moscow 8% year on year. And with global crude prices
have asked state-owned and have sought to lessen their dependence on at multi-year highs, obtaining discounted oil
oil companies to consider oil and gas imports from Russia. But India has from Russia has become an attractive prospect,
buying BP’s stake in sought to maintain its neutrality, despite pres- despite the additional challenges trading with
Rosneft. sure from the West to take a tougher stance. Moscow currently poses.

P6 www. NEWSBASE .com Week 18 05•May•2021