By Charles Hugh Smith
India has stepped up efforts to ensure sufficient energy supplies for the domestic market by imposing limits on fuel exports by introducing export duties.
This will hit the profits of refiners such as Reliance Industries, Nayara Energy, and ONGC, Reuters has reported.
Indian refiners have been on a discounted Russian oil buying spree. They have been then exporting this cheap oil in the form of fuels, taking advantage of tight fuel supplies broad but effectively undermining the security of domestic supply.
Indian imports of Russian oil rose to a record high of over 840,000 bpd, according to Kpler data cited by Reuters in early June, and they may have risen further last month to over 1 million barrels daily. This would mean the share of Russian import supply of crude in India has gone up to almost a quarter, the report noted.
A more recent report in India’s Tribune suggested that last month Russia may have become India’s largest single supplier of oil. According to the new Reuters report, the biggest buyers of Russian crude were Reliance Industries and Nayara Energy—the latter partially owned by Russia’s Rosneft.
In addition to the export duties, the Indian government obliged exporters to sell to the domestic market an amount of gasoline that is equivalent to 50 percent of what they sell abroad over the fiscal year that ends in May 2023.
For diesel, the domestic market sales requirement is at least 30 percent of what exporters sell abroad.
In a further hit to the Indian oil industry, the authorities also imposed a windfall tax in the form of a special additional excise duty at a rate of close to $300 per ton of crude.
India is one of the most import-dependent nations in the world when it comes to oil, depending on foreign supply for over 80 percent of the oil it consumes.
By Charles Kennedy for Oilprice.com