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India considers purchase of Russian oil

but without sanctions consequence

POLICY THE Indian government, energy compa- floating rate exchange system, since payments
nies and refiners are seeking to find their way through the international SWIFT system is no
around international sanctions in order to pur- longer possible. Reports from India say that the
chase heavily discounted Russian oil. Russia is two countries are considering using Chinese
reported to be offering India a discount of up to currency as a means of conducting transactions,
27% against the price of Dated Brent. but the US has warned China against extending
The US, the European Union and numerous any form or military or economic aid to Moscow.
other Western-allied countries have adopted a “Rupee-ruble trade is very much on the Russia is reported
set of strict sanctions designed to retaliate against cards,” an Indian official was quoted as saying
Moscow for its unprovoked invasion of Ukraine in the international press. “We are working on to be offering
on February 24. The US and other countries have a currency arrangement to facilitate trade, espe-
banned the import of Russian crude and the EU cially as we also plan to increase oil purchase India a discount
has announced its intention to greatly reduce its from Russia.”
imports of Russian oil and gas. Such an arrangement could see Indian busi- of up to 27%
India has not condemned Russia’s actions in nesses paid in rupees for their exports to Russia against the price
Ukraine and sees Russia’s oil offer as an opportu- rather than foreign currency.
nity – if it can manage to keep from falling foul A number of other matters could compli- of Dated Brent.
of the sanctions. A decision by India to purchase cate a deal between the two countries, includ-
Russian crude would be seen as throwing a life- ing securing ships for transport and insurance
line to Russia’s economy, which depends heavily charges.
on oil and gas export revenues. But such a move India imports more than 80% of its oil, but
would likely invite the wrath of numerous West- only a fraction of that comes from Russia and
ern countries. purchases amount to around $1bn per year. It
India is struggling to put its economy on track also relies on Russia for fertilisers and around
in the wake of the coronavirus (COVID-19) pan- 60% of its military hardware. In December, Rus-
demic and energy costs that had already been sia’s state-oil Rosneft agreed to supply India with
rising steeply before the start of the war. Indian 2mn tonnes of crude during 2022.
officials are reported to have had discussions Meanwhile, roughly $500mn in payments for
with their Russian counterparts about purchas- goods exported by Indian companies to Russia
ing Russian oil by establishing a ruble-to-rupee are held up owing to the sanctions.™

P8 www. NEWSBASE .com Week 11 18•March•2022