In January, after negotiations with the United States, India sharply reduced its purchases of Russian oil. But just two months later, India and Russia are strengthening energy cooperation: the parties have already agreed to prepare for the resumption of direct sales of Russian LNG for the first time since the start of the full-scale war in Ukraine.
Source: Bukvy
This was reported to the publication by sources familiar with the situation. According to them, if India decides to conclude a deal that risks violating Western sanctions, the negotiations could be completed within a few weeks.
Details of the negotiations between Russia and India had not been previously disclosed. An “oral agreement” on talks regarding an LNG deal was reached at a meeting between Russian Deputy Energy Minister Pavel Sorokin and Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri on March 19.
Both also agreed to further increase crude oil sales to India, which could double compared to the January level and reach at least 40% of India’s total import volume within about a month, sources said.
India has become a major buyer of Russian oil. Last year, it purchased crude oil worth nearly $44 billion, thus playing an important role in supporting the Kremlin’s military economy.
India separately informed its energy importers to prepare for the resumption of Russian LNG purchases, one source reported. According to this source and a second person familiar with the request, Delhi has already reached out to Washington regarding a possible lifting of sanctions.
India’s Ministries of Foreign Affairs and Petroleum did not respond to questions about a potential LNG deal. Ministry of External Affairs spokesperson Randeep Jayswal told journalists last week that Delhi is negotiating with several countries to ensure energy supplies, including LNG.
The Indian authorities also stated that they are purchasing shipments of Russian liquefied petroleum gas, which is primarily used for cooking and is not subject to sanctions.
The Russian Ministry of Energy refused to comment on any negotiations with India, and the U.S. Department of the Treasury did not respond to questions regarding sanctions relief.
The White House and the Ukrainian Embassy in Delhi did not respond to requests for comments.
“India has chosen a course that best serves its national interests, based on a long-standing and trusted partnership with Russia,” said Ajay Malhotra, former Indian ambassador to Moscow.
Delhi now has to “demand exemptions or compromises as a routine part of negotiations between strategic partners,” he added, referring to Washington.
Although the U.S. has treated India for decades as a strategic counterbalance to neighboring China, the world’s fifth-largest economy has now been shaken twice in less than a year by decisions initiated primarily in Washington.
After many years of purchasing discounted crude oil from Russia, Delhi sharply reduced purchases after Trump imposed tariffs of up to 50% on Indian goods, among the harshest punitive measures levied on any country.
India’s calculations quickly changed after the U.S. and Israel attacked Iran on February 28. Tehran’s response included attacks on ships in the Strait of Hormuz, effectively blocking the narrow corridor through which about half of India’s crude oil and LNG supply passes.
Since then, long queues have formed at some Indian gas stations, and some restaurants have run out of cooking gas. Demand for Russian energy exports, which bypass the Persian Gulf on their way to Asian consumers, has surged across regional economies.
Indian state-owned refineries began ordering additional Russian crude oil purchases just hours before the U.S. announced on March 5 a temporary exemption allowing Delhi to buy certain sanctioned cargoes. As oil prices continued to rise, Washington further eased restrictions.
Some Indian politicians expressed regret that Delhi reduced imports of Russian crude oil as a concession to the U.S., according to a government document reviewed by Reuters.
“India reduced purchases of discounted Russian crude oil, which could somewhat ease the situation,” the note stated, briefing on the Middle East crisis prepared on March 20 for the Cabinet Secretariat. It warned that a prolonged disruption of oil flows from the Middle East would trigger a cascade of economic problems, “leading to higher inflation, currency weakening, and increased external debt.”
Exports growth could fall by 2–4%, the note warned, adding that wholesale inflation could rise by 0.3–0.7%.
Russia, which has maintained friendly ties with India since the Cold War, is using its advantage.
Any new LNG deal is likely to include less favorable terms for India compared to the 20-year supply agreement the Indian state-owned company GAIL signed with Russian Gazprom in 2012, one source said.
Executives from the Russian state power grid company Rosseti, who were in Delhi this month for an industry summit, also proposed cooperating with their Indian colleagues on energy transmission facilities, mainly in mountainous and remote regions of the country, one source said.
If a deal is reached, it would be Moscow’s first step into India’s power transmission sector.
Russia also seeks to expand air connectivity with India: Timofey Titarenko, head of Pulkovo Airport in Saint Petersburg, told Reuters last week that he visited Indian airports and explored the possibility of increasing direct flights.
Russian Foreign Minister Sergey Lavrov said this week at a conference on India-Russia relations that 96% of trade between the two countries is now conducted in rupees and rubles.
“Time-tested Russian-Indian friendship serves as an example of how interstate relations should and can be built — on the basis of equality, mutual trust and respect, and consideration of each other’s interests,” he said.
In March, at a conference in Mumbai, the head of the Indian branch of Russian lender Sberbank said that rupee-ruble transactions of up to $1 billion can now be processed in just one day, more than twice as fast as a few years ago.
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