India Concerned About Russia’s Crude Oil Production Cuts
India has expressed concern over Russia’s continued crude oil production cuts to comply with the OPEC+ agreement, even from assets where Indian state-run companies are stakeholders. The reduction in Russian production has led to a decrease in the amount of oil available in the global market. While a government official stated that India was not overly concerned about the development, another official acknowledged the impact of rising oil prices on the country’s import bill, inflation, and trade deficit.
Investments in Russian Oil Assets
Indian state-run companies, including ONGC Videsh Limited (OVL), Bharat Petroresources Limited, Indian Oil Corporation Limited (IOCL), and Oil India Limited (OIL), have invested a total of $16 billion in Russian oil assets. These investments include stakes in the Sakhalin-1 hydrocarbon block, Rosneft’s subsidiary CSJC Vankorneft, and LLC Taas-Yuryakh. The reduction in Russian oil production could potentially affect the returns on these investments.
Impact on India’s Oil Imports
India imports more than 80% of its oil requirements, making it highly vulnerable to any rise in global oil prices. The reduction in oil production has contributed to the increase in oil prices, which could further impact India’s import bill, fuel inflation, and widen the trade deficit. In anticipation of increasing volatility in the energy market and voluntary production cuts by major oil producers, India is considering reducing its dependence on crude oil. The recent launch of the global biofuels alliance with India is seen as a step in that direction.
Summary of News:
★India is concerned about Russia’s crude oil production cuts, even from assets where Indian state-run companies have invested.
★The reduction in Russian oil production has led to a decrease in the amount of oil available in the global market.
★India, as the world’s third-largest oil importer, is concerned about rising oil prices and its impact on the country’s import bill, inflation, and trade deficit.
★Indian state-run companies have invested $16 billion in Russian oil assets, and the reduction in production could affect the returns on these investments.
★India is considering reducing its dependence on crude oil and has launched a global biofuels alliance to reduce the world’s dependence on petrol and diesel.
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