Recent reports show that India has recorded a significant increase in its imports of crude oil from Russia, reaching a record high of 3.9 million metric tonnes (MT) in the 2020-21 fiscal year, compared to 2.7 million MT in the previous year.
Reasons behind the increase
This surge in imports is attributed to India’s efforts to diversify its oil sources and decrease its reliance on the Middle East. India has been actively pursuing stronger energy ties with Russia, given its vast oil reserves and status as one of the largest crude oil producers globally.
India’s rapidly expanding energy demand has made it an attractive market for Russia to increase its oil exports. The two countries have been working together to strengthen their energy partnership, with India investing in Russian oil fields and Russia supplying crude oil to Indian refineries.
The bigger picture
India has been making efforts to diversify its oil sources and decrease its reliance on the Middle East, leading to a rise in imports of Russian oil. Approximately 80% of India’s crude oil needs are met through imports, with two-thirds of those imports originating from the Middle East.
India’s crude oil imports from Russia have been increasing at a faster rate compared to other countries. Currently, Russia is positioned as the third-largest crude oil supplier to India, trailing behind Iraq and Saudi Arabia.
India has taken steps to ensure its energy supply by investing in Russian oil fields. One such investment was made in 2018 when India’s state-owned Oil and Natural Gas Corporation (ONGC) purchased a 10% stake in Russia’s Vankor oilfield, which is estimated to have reserves of 2.5 billion barrels of oil.
The majority of India’s oil imports from Russia are transported through a pipeline linking the Russian town of Novorossiysk to the Indian port of Mundra in Gujarat. This pipeline has a capacity of 20 million tonnes per year and is managed by a joint venture between Rosneft, Russia’s state-owned oil company, and a group of Indian firms.
Russia is interested in boosting its oil exports to India, as the country is among the fastest-growing energy markets globally. The International Energy Agency predicts that India’s energy demand will rise by 3.5% annually over the next 20 years.