New Delhi: While the United States (US) was the largest importer of oil products derived from Russian crude since the introduction of the crude oil price cap on December 5, 2022, until the end of December 2023, India was the second-largest consumer of Russian crude, and Jamnagar refinery in India, owned by Reliance Industries Limited (RIL), was the largest exporter of oil products derived from Russian crude, says a new report. "In the 13 months since the oil price cap took effect, over one third of India’s exports of oil products to sanctioning countries was derived from Russian crude (EUR 6.16 billion). A huge proportion of this came from the Jamnagar refinery, which alone exported EUR 5.2 billion of oil products produced from Russian crude to the price cap coalition. India imported Russian crude worth EUR 3.04 billion to create these products for sanctioning countries," Finland-based Centre for Research on Energy and clean Air (CREA) said in a report.
The report is significant because it highlights how the G7-led coalition countries, known as the Price Cap Coalition (PCC) countries, who shunned the import of Russian crude oil and imposed price caps, allowed refined oil products to come in through third countries legally because of a loose policy.
The PCC countries imposed a price cap of USD 60 per barrel starting December 5, 2022, while placing no restrictions on buying or using Russian crude oil or exporting products derived from it to keep the flow of refined products to the market continued while restricting Moscow's revenue. This was a punitive measure undertaken by the G7 nations for Russia's invasion of Ukraine in February 2022.
The USA imported EUR 1.6 billion worth of oil products derived from Russian crude since the introduction of the crude oil price cap (December 5, 2022) until the end of December 2023, said the report. Around EUR 807 million of Russian crude was used to make oil products which were then exported to the USA — making it the largest importing country. "EUR 2.6 billion of Russian crude was used to make oil products for countries in the EU, with the top three being the Netherlands (EUR 590 mn), France (EUR 422 mn) and Italy (324 mn)," said CREA.
The price cap coalition countries imported a further EUR 469 million worth of oil products from the Vadinar refinery, it said, alluding to the refinery operated by Nayara Energy in Gujarat. "Russian energy giant Rosneft - who are on OFAC's list of sanctioned entities - is its single largest shareholder with a 49.1 percent share in the company," said the report.
The USA imported EUR 59 million of oil products from Vadinar starting from the introduction of the crude oil price cap until the end of December 2023. According to CREA's estimate, 42 percent of the refinery's feedstock is Russian crude.
Even though PCC nations have maintained a stance of not buying crude oil from Russia directly, they, however, have been importing petroleum products from China, India and Turkey that have emerged as major buyers of Russian crude oil. Turkey's port of Aliaga (the location of the STAR refinery and Tupras Aliaga Izmir refinery), was the second-highest exporter of oil products made from Russian crude to the price cap coalition, after Jamnagar refinery, said the report.
"EUR 8.5 billion (USD 9.18 billion) of price cap coalition countries' imports of oil products between December 1, 2022 and December, 2023 were made from Russian crude. These imports in a 13 month period are equivalent to 68 per cent of the EU's annual commitment to aid Ukraine between 2024 and the end of 2027," CREA said.
In 2023, there was a 44 percent year-on-year increase in sanctioning countries' imports of oil products, by volume, produced from Russian crude, it said, adding the price cap coalition's imports of oil products made from Russian crude oil generated EUR 1.7 billion of tax revenues for the Kremlin from December 2022 to December 2023.
Since the introduction of the price cap till December 2023, the USA imported EUR 1.6 billion worth of oil products derived from Russian crude. EUR 807 million of Russian crude was used to make these products for the USA, it said, adding price cap coalition countries imported EUR 2.4 billion of diesel derived from Russian crude.
"Over one-third of sanctioning countries' imports of oil products from the eight major refineries identified as using Russian crude, consisted of diesel, worth EUR 7.4 billion. 76 per cent of this, worth EUR 5.7 billion, came from the Jamnagar refinery in India," it said. According to CREA's estimates, EUR 1.88 billion of this diesel was derived from Russian crude.
"This lies upon the assumption that the diesel exported from this refinery is produced from the same proportion of Russian feedstock as for all other oil products. Relying upon a similar assumption, EUR 2.4 billion of diesel imported by the price cap coalition from these eight refineries is derived from Russian crude," it added.
The EU bars EU vessels as well as insurers from handling Russian-origin oil unless it is priced at or below the price cap.
