EU circumvents oil sanctions using India

The European Union (EU) increased its purchases of refined petroleum products from India, which has become the largest buyer of Russian oil, which is sanctioned. The fact that the EU circumvents its own sanctions to guarantee the security of energy supplies reveals the contradiction in the attitude of the embargo towards Russia.

Western countries often keep closing sanctions loopholes in their rhetoric and agenda, but they do not prevent Russian products from entering the continent as intended.

The EU embargo on imports of crude oil from Russia began on December 5, 2022, while the ban on importing various products derived from refinery oil, such as diesel and liquid fuel (fuel-oil) transported by sea , and the application of maximum prices for these products began on February 5. .

According to data from data analysis company Kpler, India’s pre-war crude oil imports from Russia in January 2022 stood at 67,000 barrels per day.

INDIA INCREASES ITS IMPORTS FROM RUSSIA

India, which did not buy Russian crude oil in February 2022 when the war began, has continuously increased its crude oil imports from the country as Russia began selling its oil cheaply after the embargoes.

Increasing its purchase of cheap Russian crude oil to 136,000 barrels per day in March 2022, India increased its purchase of crude oil from Russia to 1.12 million barrels per day in June 2022.

In December 2022, when the EU began to impose an embargo on Russian crude, India’s crude purchases from the country reached 1.2 million barrels per day. From this date, India’s crude oil exports from Russia increased rapidly, surpassing 2.15 million barrels per day in May, setting a new record.

India increased its purchases of crude oil from the country by almost 1,500 percent in May compared to the month before the war. India’s crude purchases from Russia increased 79 percent in May compared to December 2022, when the EU began to impose an embargo.

Thus, India became the largest buyer of Russian crude, while Russia became India’s largest supplier of crude. Russia, whose biggest market was the EU before the war, transferred more than 90 percent of its crude oil exports to India and China.

The economic value of India’s crude oil imports from Russia has risen from $2.5 billion annually to more than $30 billion in the past year.

OIL IMPORTS BY THE EU RISE INTO INDIA

After the war, EU imports of refined petroleum products from India also increased. Processing profitable Russian crude oil in its refineries, India has even increased its supply to some EU countries to which it has hardly ever exported before.

According to the data, the Netherlands, one of the EU’s energy trading hubs, imported refinery oil products from India at a level of 28,000 barrels per day in February 2022, when the war started, while this figure peaked at 76,000 barrels in January 2023. . Dutch imports of refinery oil products from India amounted to 49.2 thousand barrels per day in May.

France, which had been importing intermittently from India before the war, continued its imports of oil products from the Indian refinery uninterrupted since December 2022, when the Russian oil sanctions came into force. The import level, which on this date was 12 thousand barrels per day, reached 37 thousand barrels per day in May.

Germany, which imported almost no oil products from India in the three years before the war, increased its purchases from 8.9,000 barrels a day in November 2022 to more than 10,000 barrels a day.

Italy, Romania, Belgium and Spain were among the EU countries that accelerated their oil purchases from India, especially in the last 6 months.

INCREASES BY 70 PERCENT AND REACHES 15 BILLION DOLLARS

Annual sales of petroleum products by the country’s refineries to Europe rose more than 70 percent last year, reaching $15 billion, according to data from India’s Ministry of Commerce.

Despite the fact that the EU does not buy Russian crude oil or petroleum products, the increase in imports of refinery products from India brings with it the question of how enforceable and consistent are the EU trade restrictions and sanctions.

On the other hand, the unanimity of all 27 EU member states is required to include oil products sourced indirectly from Russia and crude oil sourced from pipelines within the scope of the embargo.

EU countries, which have had the most difficult period on energy and inflation, are not expected to take tough approaches that worsen economic conditions at this stage.

‘EITHER PROHIBITED OR NEVER’

In his assessment, Kpler’s lead crude oil analyst Viktor Katona claimed that India processes the crude oil it imports from Russia at its refineries and thus transforms it into “its own refinery oil products”.

Stating that diesel, which is produced after imported crude oil is converted into petroleum products, has become a product of Indian origin, Katona said:

“Then this diesel is exported to Europe. This does not mean that Europe will continue to import Russian crude, because diesel is technically a different product and now originates from India.

It is difficult to embargo the supply of diesel produced from Russian crude because Russian crude accounts for 40-45 percent of India’s recent crude imports, and when refined it is mixed with crude from Saudi Arabia, Iraq and other countries. countries.

In other words, the EU will not ban or completely ban the refining of oil products from India because it is impossible to identify the source once they are converted into diesel.”

BORRELL REACTED LAST MONTH

EU High Representative for Foreign Relations and Security Policy Josep Borrell said in a statement to the EU-India Trade and Technology Council in Brussels last month that the EU should be strict and impose sanctions on India, which refines Russian oil and sells to Europe. .

Borrell, “If diesel or gasoline produced with Russian oil enters Europe from India, this is definitely a circumvention of sanctions and member states need to take action on it,” Borrell said.

Indian Foreign Minister Subrahmanyam Jaishankar also reacted to this statement, stating that after the refining of Russian crude oil in India under EU law, it cannot be treated as Russian goods and cannot be subject to to EU sanctions.

Borrell later retracted his harsh statements towards India, stating that it was perfectly legal for India to buy Russian oil and that India was also free to sell refined petroleum products to the EU.

“Almost 36 percent of Russia’s oil exports go to India. However, exports of refined petroleum products from India to Europe increased by almost 7 times. They are free to do what they want. I cannot impose European standards on them. The refined product might be thought of as a different product from petroleum. The fact is that we do not import Russian oil, but we import refined oil products from Russia, ”he said.

Borrell affirmed that thanks to this, the sanctions were evaded and that they continue to work on this issue.

APPLICATION OF THE MAXIMUM PRICE TO RUSSIAN PRODUCTS

On December 5, the ban on importing oil transported by sea from Russia and the maximum price of 60 dollars per barrel came into force.

In this context, if Russian oil is sold to third countries at a price higher than the determined price, companies from the G7 countries and the EU cannot offer various services such as transportation, insurance and brokerage to this oil. To provide these services, Russian oil must trade below the maximum price.

The EU ban on imports of various products derived from refined oil, such as diesel and liquid fuel (fuel-oil) transported from Russia by sea, and the application of maximum prices for these products began on February 5. In addition, the EU and G7 countries also imposed restrictions on exports of Russian refinery oil products to third countries.

Within this framework, Western countries began to apply two different price ceilings to Russia, namely high-value and low-value refinery products. A price ceiling of $100 a barrel was imposed on Russian diesel and kerosene, and $45 a barrel on cheaper liquid fuels and light-colored petroleum products. (AA)