The European Union's recent imposition of sanctions on Russia has triggered a wave of discontent in India, specifically targeting the Nayara Energy's Vadinar refinery in Gujarat. This move has been perceived as a blow to India's energy security and has raised concerns about potential double standards in the global energy trade.
The EU's sanctions package, the 18th since Russia's invasion of Ukraine, aims to curtail Russia's oil and energy sector revenues. These measures include a ban on importing refined petroleum products made from Russian crude oil, even if processed in third countries, and a lowered oil price cap. The inclusion of the Vadinar refinery, in which Russian energy firm Rosneft holds a 49.13% stake, marks the first time the EU has directly sanctioned an Indian entity.
India's Ministry of External Affairs (MEA) has responded firmly, asserting that India does not subscribe to unilateral sanctions imposed outside the United Nations framework. MEA spokesperson Randhir Jaiswal emphasized India's commitment to its legal obligations and highlighted the government's paramount responsibility to ensure energy security for its citizens. He also stressed that there should be no double standards in energy trade, a veiled reference to European countries continuing to purchase refined products made from Russian oil through third countries.
The sanctions against the Vadinar refinery could have several implications for India. The refinery, with a capacity of 20 million tonnes per annum, relies on exports to Europe and Africa due to its limited domestic retail network. The EU's ban on refined petroleum products made from Russian crude oil could disrupt these exports, potentially impacting the refinery's operations and threatening jobs.
Furthermore, the sanctions may deter potential buyers like Reliance and Aramco from acquiring Rosneft's stake in the Vadinar refinery. This could complicate Rosneft's efforts to divest its stake and further isolate the refinery from the global market.
The EU's decision to lower the oil price cap from $60 to $47.6 per barrel is another point of contention. While this could potentially benefit India by allowing it to purchase Russian crude at a reduced rate, it also raises concerns about the long-term stability of energy supplies and the potential for further restrictions.
India has significantly increased its reliance on Russian oil since the start of the Russia-Ukraine war in 2022, with Russia now accounting for approximately 40% of India's total oil imports. This has allowed India to secure discounted crude oil, but it has also made the country more vulnerable to geopolitical pressures.
The EU's sanctions have been criticized for potentially harming India's economic interests while doing little to curb Russia's oil revenues. Some analysts argue that the sanctions could simply divert Russian oil to other markets, without significantly impacting Moscow's financial position.
India has consistently defended its right to purchase oil from Russia, citing its energy security needs and advocating for a pragmatic approach to foreign policy. The country has also emphasized its commitment to diversifying its energy sources, expanding its oil import network to include countries like Guyana, Brazil, and Canada.
As the situation unfolds, India faces the challenge of balancing its energy needs with its international obligations and navigating the complex geopolitical landscape. The EU's sanctions on the Gujarat refinery have underscored the growing tensions in the global energy market and the potential for further disruptions in the future.
