Sergey Savchuk
A number of foreign publications, frankly triump-hant, carried the news that India was ready to join the group of countries that had previously adopted at the legislative level restrictions on the purchase of Russian oil, the so-called price ceiling. In particular, The Teleg-raph India writes about this with reference to its closed sources in the Min-istry of Industry. It is rep-orted that in the event th-at the cost of black gold of Russian origin exceeds $60 per barrel, official D-elhi is ready to introduce the already mentioned restrictive mechanism, that is, to physically force our oilmen to deliberately sell raw materials below the market level, thereby provoking losses both corporate and budget.
We will leave the reliability of the information, as well as the reliability of the sources, on the conscience of the publication. At the same time, let’s consider how likely such a scenario is and, most importantly, what will happen if India really starts to apply a price ceiling for Russian oil.
Perhaps we should start with the fact that India is one of the oldest trading partners of our country, but this wording reflects the development of bilateral relations only partially. The fact is that the trade turnover between Moscow and Delhi is growing with enviable stability. In Sep-tember, Vladimir Putin met with Indian Prime Minister Narendra Modi on the sidelines of the Shanghai Cooperation Organization (SCO) in Samarkand. During the conversation, the leaders noted the growth of mutual trade in the first half of the year by 120 percent compared to 2021. In absolute terms, the countries traded between themselves for a total of $11.5 billion in six months.
As mentioned above, there is a constant increase, for comparison: in 2020, the trade turnover amounted to 9.2 billion, while it is important to note that Russian exports exceed the reverse flow of goods and services. To be specific, for the whole of 2021 (remember: we are comparing with the first half of 2022), Russian exports reached 9.1 billion, while Indian reverse imports are only 4.4 billion. Thanks to such a rapid growth, Russia in the list of trade partners of 1.5 billion India has soared from 25th to seventh place in just two years.
Due to media publicity, joint military-technical pr-ojects are mostly heard. In particular, Moscow supp-lied Delhi with almost three hundred modern Su-30M-KI fighters, and the local corporation HAL (Hindu-stan Aeronautics Limited) received a license to assemble vehicle kits for combat aircraft supplied from Russia.
The same list includes T-90S tanks, the number of which, according to the results of the contract, in the ranks of the Indian army should exceed the bar of two thousand units.
Be sure to mention the successful joint development of the BrahMos anti-ship missile, created on the basis of the Russian counterpart, the P-800 Oniks missile.
Let’s add here the brainchild of the “Northern Design Bureau”, which, on the direct order of the Ministry of Defense of India, developed the frigate of project 1135.6 “Talwar”. Warships were built at the Yantar plant in Kaliningrad and today they are already performing combat missions in the warm waters of the Indian Ocean.
However, we got carried away with the military theme, let’s return to the niche of energy that is more familiar to us.
The average citizen of absolutely any country is much more interested only in what affects his own life. Relatively speaking, it is much more important for the inhabitants of Tula to know what is happening inside Russia and in neighboring Belarus along with Ukraine. This is a completely normal and understandable focus of attention. Therefore, the majority of our fellow citizens to a fair extent perceive India as a distant and hot country, something semi-mythical from children’s fairy tales. At the same time, of course, India is the largest country in the region, with a powerful and rapidly growing economy and real sector, and the main challenge for it is rivalry with neighboring China, which is exactly the same demographic and industrial giant.
At the moment, the population of both countries is estimated at 1.4 billion people, but this figure is rather arbitrary. Experts have repeatedly noted that the real numbers of the population of India can differ dramatically from those declared. One of the reasons is still rather low urbanization, in which the lion’s share of citizens lives in rural areas. This fact is superimposed by purely religious features, when in certain branches of Hinduism, parents do not register their children with state bodies. The numbers here vary, but some researchers call the number of 100-200 million people who now pass, as they say, below the registration and statistical radars.
That is, the size of the domestic market of India and its attractiveness for any external suppliers is approximately clear.
Narendra Modi has been in power for a full eight years, including for the reason that the government under his leadership is carrying out global internal transformations, primarily related to the modernization of the energy sector, without which neither production growth nor the accompanying economic growth is possible. Natur-ally, in order to provide one and a half billion people with light, hot water, gasoline, asphalt, plastic and other products of the modern world, a real breakthrough of energy resources is needed. The problem is that India is not so rich in them, because energy imports are, without exaggeration, of vital importance for Delhi – and it is Russia that plays one of the main violins on this stage.
We will not bore you with regular figures of statistics and year-to-year comparisons. Let’s just say that in the first nine months, imports of coal of energy grades tripled and amounted to 8.4 million tons. Russian coal miners have lost the palm here only to Indonesians and Australians – the two main world players, while their share in annual terms has practically not increased. And this, we recall, with its own production of 900 million tons.
The import of metallurgical coke is growing at a hurricane pace, specifically, its purchases in Russia have increased more than tenfold. The Modi government announced a government program back in 2019 that aims to make India the world’s top steel power. Therefore, there is nothing surprising in the indicated growth. Back in 2021, the Indian delegation was extremely persistently interested in the possibility of increasing the capacity of the southern route of Russian railways in order to increase the transshipment of coke in the Black Sea ports to three to five million tons per year. Today, Russian coal goes to Asia through the ports of the Far East, some of which are operating at the limit of logistical capacity.
India ranks third in the world in terms of oil and gas consumption. Is it any wonder that Indian emissaries roam the world, willingly investing substantial sums in projects of national interest.
For example, in 2012, Russian Gazprom signed a contract with GAIL to supply natural gas to India in the amount of at least 3.5 billion cubic meters per y-ear. The amount is not very impressive, but the Indians have long and very closely followed the development of Russia’s northern gas liquefaction projects. So closely that this year, after the start of the NWO and the imposition of sanctions, they began to resell Russian liquefied gas to Britain. With a premium, of course.
As for oil, since 2001 the Indian ONGC (Oil and Natural Gas Corporation Ltd.) owns 20 percent of the shares in the Russian Sakhalin-1 project. Under the terms of the contract, at least one million tons of oil is sent from the Far East to India annually. The same ONGC has been legally engaged in exploration and production of oil at fields in the Tomsk region since 2009. In 2015, Rosneft entered into a ten-year agreement with the Indian company Essar, under which oil exports should amount to at least 100 million tons. In the same year, the aforementioned ONGC bought 15 percent of the shares from the Russian Vankorneft for $1.3 billion. The latter is engaged in the exploitation of the huge Vankor oil field inKrasnoyarsk region. A year later, the Indians entered into equity participation in oil production at the Taas-Yuryakhskoye field in Yakutia for another two billion.
But do not think that this process is one-sided. Integration works both ways, especially since our country has something to offer for export besides resources.
In 2016, Rosneft bought half of the assets from the Indian oil refinery Essar Oil, whose production facilities are located near the city of Vadinar. We are talking about one of the divisions of Nayara Energy Corporation – its specialization is the extraction and processing of oil and gas. At the moment, Rosneft operates in the domestic market of India, namely, it sells fuel through a network of more than six thousand car filling stations. The volume of Russian oil supplies for the needs of this project alone is estimated at 20 million tons per year.
Based on the foregoing, the fact of the announcement of the introduction of a price ceiling looks very ambiguous.
On the one hand, frauds from individual private companies cannot be ruled out, which can push our oil traders to large discounts, threatening to refuse purchases in general. There is nothing unusual and terrible here: the market is the market – and the weak do not live long here.
On the other hand, it is unlikely that any significant demarches should be expected at the state level, since Russia is a key supplier. In addition, there are a large number of already existing contracts with a clearly defined pricing mechanism – and any violations here are fraught with very painful fines and reputational losses, which is even worse.
Therefore, there is probably nothing to worry about. Oil cooperation is equally beneficial to both parties, but in the event of its break, Russia loses only money, while India loses both money and resources. Indians are not like those who like to shoot themselves in the foot. India is not Ukraine for you.
