‘The right to sell oil to India, why is the snake crawling on the EU’s chest?’
How will EU find out from which crude the diesel sold in Europe was made?
Basically Borrell is accusing India of legalizing restricted Russian oil by converting it into unrestricted Indian diesel. But refining is an industrial process, not just washing. Crude oil is converted into various forms in the oil refinery – diesel, petrol, naphtha, kerosene, fuel oil, bitumen and coke. This is manufacturing, not laundering. Secondly, Indian refineries import crude oil from many places. It is impossible to trace which barrel of diesel came from which barrel of crude oil. Many refineries produce their product by blending different crude oils.
Different types of crude oil contain different things. Light crude oils are more valuable because they yield more petrol and kerosene. The amount of acid and sulfur in crude greatly affects its price and yield. India’s exporting refineries mix different types of crude according to their requirement to produce the most profitable product.
Diesel is surplus so why not sell it to India
India has two export-oriented refineries – Reliance and Nayara (formerly Essar Oil, later bought by Russia’s Rosneft). More than half of the oil imported from Russia is added to the account of these two. Both these companies are the main diesel exporters of the country. Mangalore Refinery and Petrochemicals Limited are also counted among the major diesel exporters in the government sector.
Naira is owned by a Russian oil company. Obviously, it will import crude oil from its own oil fields in Russia. This creates a more uncomfortable situation for the EU. Russian crude oil is being refined by a Russian company in India and sold to Europe in the form of diesel.
If America is not in trouble, then what is the EU’s problem?
Firstly, the US is the biggest buyer of Indian diesel. Russia is the leader of anti-sanctions. When America has no problem in getting diesel from India then why should EU have problem? Second, the sanctions are aimed at hurting Russia, not India. Russia is already incurring losses by selling crude oil to India at a discount.
Simply put, there is a diesel shortage in the EU. India has diesel surplus which will be exported somewhere. Suppose Naira is currently exporting diesel made from Russian crude to Europe, while Indian Oil Corporation is exporting diesel from Gulf crude to Sri Lanka. If Naira sells diesel to Sri Lanka and IOC to EU, will geopolitics matter? no way. The more Russia suffers, the more EU customers will pay. There will definitely be a slight change in the transport cost of these oil companies, there will be an impact on the profits as well, but the geopolitical situation will not change. In such a situation, the EU’s claim that the sanctions are being defied does not make any sense.
Click here to read the original article by Swaminathan Iyer in The Times of India