* Sources say India and Russia are discussing resuming liquefied natural gas trade amid disruption in Gulf supplies
* New Delhi has reached out to Washington to obtain a possible exemption from sanctions
* India’s imports of Russian crude oil may soon double to 40% of its total supplies
* The United States has spent years pressuring India to limit its purchases of Russian energy
Written by Krishna N. Das, Nidhi Verma, and Saurabh Sharma
NEW DELHI – As Indian diplomats negotiated a deal that would ease punitive US tariffs on the South Asian nation’s exports in January, New Delhi reduced its purchases of Russian crude oil in a move widely seen as a painful concession to President Donald Trump.
But just two months later, Delhi and Moscow are deepening their energy cooperation, with both sides agreeing to prepare for Russia to resume direct sales of liquefied natural gas for the first time since the start of the Ukraine war, according to two people familiar with the matter. One of the sources said that if India decides to pursue the agreement, which threatens to violate Western sanctions, negotiations could end within weeks.
Details of the talks, which come amid a significant rise in energy prices due to the US-Israeli attack on Iran, have not been previously announced. The “verbal agreement” to negotiate the LNG deal was reached during a meeting on March 19 between Russian Deputy Energy Minister Pavel Sorokin and Indian Petroleum and Gas Minister Hardeep Singh Puri in Delhi, the sources said.
The two officials also agreed to increase crude oil sales to India, which could double from January levels to at least 40% of India’s total imports within about a month, three people familiar with their deliberations said. India has become a major buyer of Russian crude, which was significantly discounted after the invasion of Ukraine, which became a point of contention with the Trump administration. The world’s third-largest oil importer and consumer bought nearly $44 billion worth of crude oil from Moscow last year, and played a vital role in sustaining the Kremlin’s wartime economy.
One of the sources said that India separately asked its energy importers to prepare to resume purchases of Russian liquefied natural gas. Delhi has already approached Washington about potentially waiving sanctions, according to the source and another person familiar with the request.
India’s Ministry of External Affairs and Petroleum did not respond to questions related to the potential LNG deal. External Affairs Ministry spokesman Randhir Jaiswal told reporters last week that New Delhi was in talks with several countries to secure energy supplies, including liquefied natural gas. Indian authorities also said they were buying shipments of Russian LPG, which is largely used for cooking and is not subject to sanctions.
The Russian Energy Ministry declined to comment on any discussions with India, while the US Treasury Department did not respond to questions regarding sanctions relief.
The White House and the Ukrainian Embassy in Delhi did not respond to requests for comment.
“India has chosen the path that best serves its national interests, which is based on a long-term and trusted partnership with Russia,” said Ajay Malhotra, former Indian ambassador to Moscow.
He added that New Delhi must now “demand exemptions or facilities as a normal part of negotiations between strategic partners,” referring to Washington.
Double hit
While the United States has courted India for decades as a strategic counterweight to neighboring China, the world’s fifth-largest economy has now been reeling twice in less than a year due to decisions made largely in Washington.
After years of buying crude oil from Moscow at discounted prices, Delhi cut back its purchases sharply after Trump in August imposed tariffs of up to 50% on Indian goods, or among the most punitive duties imposed on any country. The US Supreme Court has since ruled that Trump acted illegally when he imposed such tariffs.
India’s calculations quickly changed after the United States and Israel attacked Iran on February 28. Tehran’s retaliation included targeting ships in the Strait of Hormuz, effectively closing the narrow strip through which about half of India’s crude oil and liquefied natural gas supplies pass. Long queues have since been seen outside some Indian gas stations, while some restaurants have run out of cooking gas.
Demand for Russian energy exports, which when transported to Asian customers bypass the Gulf, has increased sharply across the region’s economies. State-owned refiners in India began ordering additional quantities of Russian crude in the hours before the United States announced on March 5 a temporary exemption that would allow Delhi to buy some of the sanctioned cargoes. As oil prices continued to rise, Washington eased restrictions further.
Some Indian policymakers have expressed regret that New Delhi reduced imports of Russian crude as a concession to the United States, according to a government document seen by Reuters.
“India has reduced its purchases of Russian crude at a discount, which would have eased the situation to some extent,” said the memo, a briefing on the Middle East crisis prepared on March 20 for the Cabinet Secretariat.
He warned that a prolonged interruption of oil flows from the Middle East would lead to a series of economic challenges, “resulting in higher inflation, a weaker currency and higher external debt.”
He warned that export growth could be affected by between 2% and 4%, adding that wholesale inflation could rise by between 0.3% and 0.7%.
Warming relations Russia, which has maintained cordial relations with India since the Cold War, is pressing its advantage.
Any new LNG deal is likely to include less favorable terms for India than the 20-year supply deal that India’s state-owned GAIL struck with Russia’s Gazprom in 2012, according to one of the sources. “It’s now a seller’s market,” the person said.
Executives at Russian state power grid company Rossetti, who were in Delhi this month for an industry summit, also proposed working with their Indian counterparts on transmission facilities, largely in mountainous and remote areas of the country, one of the sources said.
If an agreement is reached, it will mark Moscow’s first foray into India’s energy transmission sector.
Russia is also keen to expand air connectivity with India: Timofey Titarenko, CEO of St. Petersburg’s Pulkovo Airport, told Reuters last week that he was visiting Indian airports and exploring the possibility of more direct flights.
The Kremlin’s top diplomat, Sergei Lavrov, said at a conference on Indo-Russian relations this week that 96% of trade between the two countries is now conducted in rupees and rubles.
He added, “The Russian-Indian friendship that has stood the test of time is an example of how to build relations between the two countries, on the basis of equality, mutual trust, respect, and taking into account the interests of the other party.”
Ruble transactions worth up to $1 billion can now be processed in less than a day, or more than twice as fast as just a few years ago, a senior executive at the Indian branch of Russia’s Sberbank said at a conference in Mumbai in March.
This article was generated from an automated news feed without any modifications to the text.
