Moscow is reportedly ready to increase its Liquefied Natural Gas (LNG) supplies to India, with Russia's Energy Minister Sergei Tsivilev stating that Russia is prepared to boost LNG exports from both current and future projects. This move aligns with India's ambition to elevate the share of gas in its energy mix to 15 percent.
This development occurs amidst evolving geopolitical dynamics, with the United States and the European Union increasing sanctions on Russia's energy sector. These sanctions target major Russian oil companies like Rosneft and Lukoil, potentially affecting their customers in India and China. The EU is also phasing out shipments of Russian LNG by sea by the end of next year and cracking down on cryptocurrency platforms that Russia has used to circumvent financial restrictions.
Despite these sanctions, Russia has been proactive in finding ways to maintain its energy exports, including assembling a "shadow fleet" of aging tankers to ship oil to Asia, circumventing the $60 price cap imposed by G7 democracies. China and India have become major customers for Russian oil, with India importing approximately 1.5 million barrels per day. However, refineries in these countries that process Russian oil could face secondary sanctions from the U.S..
In light of these potential risks, some Indian refiners are reportedly reconsidering their contracts with Russian suppliers to ensure compliance and avoid sanctions. For example, Reliance Industries, a major buyer of Russian oil, may halt imports under its long-term deal with Rosneft.
Meanwhile, India is also taking steps to bolster its own energy security. The country plans to require all LNG import terminals to build an additional 10% storage capacity, which the government can access during supply or price shocks. This move aims to create a cost-effective emergency gas reserve, leveraging existing infrastructure. India currently has eight operational LNG terminals with a combined capacity of 52.7 million tonnes per annum (mtpa), but utilization rates remain low.
The EU has also adopted its 19th package of sanctions against Russia, which includes a ban on Russian LNG imports, with a phasing out period for both long-term and short-term contracts. These sanctions also target entities in third countries, including China and India, that are enabling Russia's revenue streams.
