New Delhi: India’s largest oil refiner, Indian Oil Corp. Ltd (IOC), said on Tuesday that it would “absolutely not stop” buying Russian oil and would also comply with international sanctions. The statement underscores India’s efforts to balance energy security with growing global restrictions, even as fresh US measures target major Russian suppliers Rosneft and Lukoil.
“We will absolutely not stop (buying Russian oil) as long as we comply with the sanctions. Russian oil is not sanctioned. The sanctions are imposed on entities and shipping companies,” Anuj Jain, director (finance) of the state-owned firm, said in a call to analysts. He said the company maintains a database of sanctioned entities and will continue to source oil from unsanctioned suppliers under the price cap mechanism.
“If someone comes to me with an unsanctioned entity and the (price) cap is met and the shipping is fine, I will continue to buy it,” Jain added.
Supplies from Rosneft and Lukoil, the two Russian energy companies sanctioned last week, account for about 55% of Russia’s total oil supplies to India.
On Monday, Indian Oil Chairman and CEO Arvinder Singh Sahney said the company would comply with all sanctions imposed by the international community.
Currently, Russian supplies make up 19-20% of the company’s total oil import basket. Last week, the US imposed sanctions on Rosneft and Lukoil, which supply about 1 million barrels per day (bpd) of the 1.8 million bpd of Russian oil coming to India.
Indian public and private refiners are expected to reduce their imports from Russia after the sanctions come into effect on November 22.
On October 23, Mint reported that the latest sanctions are likely to force Indian refiners to buy from West Asian countries and other markets that do not offer rebates, adding to the country’s import bill.
A top government official said on condition of anonymity that decisions on oil resources are made at the company level. “Companies decide which oil is the most economical and whether it meets government standards. They look at both,” the official added.
Asked if the government was giving any guidance, the official said: “There’s no question we’re telling them to buy more or less. I don’t have to tell them. They’re smart enough to understand. If they buy a load they can’t take…If they’re buying oil from a sanctioned company, how are they going to pay? The banker won’t allow the payment.”
In the case of transactions with sanctioned entities, the banks and financial institutions through which the transactions take place will come under the lens of authorities and be subject to sanctions, such as the US Office of Foreign Assets Control (OFAC). These financial institutions may also face punitive measures.
