No govt directive on Russian oil imports, free to scout for alternatives if Moscow's oil becomes unfeasible, says HPCL chairman

Indian Express

6 days ago

Public sector refiner Hindustan Petroleum Corporation (HPCL) has cut down on processing Russian oil as it has lost much of its price advantage over competing crude grades, and not because of geopolitical considerations or any signal from the government, according to the company's chairman and managing director Vikas Kaushal. While HPCL has so far not received any directive from the government on import of Russian crude, the refiner is free to look at alternatives if it were to completely stop buying Russian crude in the future due to any sanctions-related reason, Kaushal said in a post-earnings analyst call.
Russian crude's share in crude oil processed by HPCL contracted significantly to 13.2 per cent in the quarter ended June 30, primarily due to lower discounts hitting the competitiveness of Moscow's barrels, according to the HPCL chairman. According to a recent report by Nomura, the implied discount on Russian crude oil for Indian refiners was estimated to have declined to around $2.2 per barrel in 2024-25 from over $12 per barrel in 2022-23.
'It's not that we are not buying Russian crude; those decisions are still open. It's just that whatever is economical will be bought,' Kaushal said in the analyst call.
'We are free to look at alternatives as and when economic situations present (themselves). If we were not to buy Russian crude for any sanctions-related reasons, the impact would not be too significant for us,' he said.
The HPCL chairman's comments come amid trade tensions between India and the US, with Indian refiners' hefty imports of Russian crude surfacing as a major irritant for the Donald Trump administration. Earlier this week, Trump announced an additional 25 per cent tariff—over and above the 25 per cent tariff announced last week on Indian goods—as a penalty for India's Russian oil imports. New Delhi has called the targeting of India over the purchase of Russian oil 'unjustified and unreasonable' and said these imports began as its traditional supplies were diverted to Europe, with the US having 'actively encouraged such imports by India for strengthening global energy markets stability'.
Indian public sector refiners have paused Russian oil purchases, which had already slowed down in previous weeks, it is learnt. While the recent slowdown in oil imports from Russia is being seen as a signal by New Delhi to Washington, sources in India's refining sector say that it is also due to discounts on Russian crude narrowing considerably. India has stated over the years that as a country that depends on energy imports, it will buy oil from wherever it gets a good deal, as long as the oil is not under sanctions. To be sure, Russian oil is not under sanctions, and is only subject to a price cap imposed by the US and its allies that applies if Western shipping and insurance services are used for transporting the oil.
The renewed pressure from the US and other Western powers—pressuring Russia's top trade partners to cut down on imports from the country—are aimed at forcing the Kremlin's hand into ending the Ukraine war. For Trump, who wants the three-year-old Russia-Ukraine war to end within days, this is an opportune time to pressure India over its Russian imports, given the sensitive trade pact negotiations between New Delhi and Washington.
When Russia invaded Ukraine in February 2022, Moscow's share in New Delhi's oil imports was less than 2 per cent. With much of the West shunning Russian crude following the invasion, Russia began offering discounts on its oil to willing buyers. Indian refiners were quick to avail the opportunity, leading to Russia—earlier a peripheral supplier of oil to India—emerging as India's biggest source of crude within a matter of months, displacing the traditional West Asian suppliers. Russia now accounts for 35-40 per cent of India's total oil imports by volume. As Europe decided to stop the import of refined petroleum fuels from Russia, Indian refiners increased fuel exports to the continent.
Despite the noise from sections of the West against India over the country's hefty purchases of Russian crude, this shift in oil and petroleum product trade had Washington's blessings, as the US wanted energy markets to remain stable and well-supplied, according to various US officials who served in the Joe Biden administration.
Sukalp Sharma is a Senior Assistant Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 13 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More