India said on Wednesday it will examine a proposal by Western nations to impose a price cap on Russian oil purchases, even as some local refiners have lined up Russian cargoes for delivery post Dec. 5, when the cap is set to take effect.
The Group of Seven richest economies (G7) has been trying to enforce a price-capping mechanism on Russian oil exports by Dec 5, when European Union sanctions banning seaborne imports of Russian crude come into force.
“I think there is an exemption for Japan for Sakhalin, then there is crude which comes through the pipeline, so they have exemptions…we will have to look at it,” said India’s oil minister, Hardeep Singh Puri, when asked if India will follow the planned price cap for Russian oil.
India has emerged as Russia’s second biggest oil client after China as some western entities shunned purchases form Moscow following its late February invasion of Ukraine.
New Delhi’s stance on the price cap is closely watched globally as a test of how effective the plan will be in curbing Russia’s oil revenue. Moscow has said it would not supply oil to any country that agrees to the price cap.
The price cap plan calls for G7 countries to deny insurance, finance, brokering, navigation and other services to oil cargoes priced above a yet-to-be-determined price cap on crude and oil products.
India’s top refiner, Indian Oil Corp, has lined up delivery of 3-4 cargoes of Russian oil post-Dec. 5 while Bharat Petroleum Corp is in the process of finalising cargoes for delivery in December, sources familiar with the two companies’ crude purchases said.
“We get Russian oil on a delivered basis, let the contours of the price cap mechanism be finalised. After that we will take a decision,” a senior oil ministry official said.
BPCL and IOC didn’t respond to Reuters request for comments.
Sources said Indian companies have time at least till end-October to place requests for more Russian oil cargoes for deliveries in December as the bulk of the purchases of Russian oil is made through spot contracts.
They said the companies are, however, awaiting clarity on issues such as payment terms, insurance and shipping.
“5th Dec is not a roadblock, we continue upliftment as per requirement and based on viable commercial offers received,” said an official at one of the Indian state-refiners.
Another source said a halt of Russian oil purchases by India will create a ‘huge energy imbalance’, which will not be affordable to some economies. “It will be trouble for everybody so I am sure a solution will emerge in the next few days,” he said
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)