New Delhi: After the European Union raised concerns about buying Indian refined oil made up from Russian crude, India asserted that its exports of refined products to Europe complied with the European sanctions regime.
Earlier on Tuesday, EU’s high representative for foreign policy, Josep Borrell told The Financial Times that the regional group was looking at ways to stop the sale of Indian refined oil that was made up from buying Russian crude oil.
“If diesel or gasoline is entering Europe …coming from India and being produced with Russian oil, that is certainly a circumvention of sanctions and member states have to take measures,” said Borrell.
This is the first time the EU’s chief diplomat has said that Brussels should act to stop this import. The strong words come as western countries move to tighten sanctions on Moscow’s energy sector.
The senior EU official had said that he would raise the matter with Indian external affairs minister S. Jaishankar. Borrell joined his EU colleagues to take part in the first ministerial meeting of the Trade and Technology Council (TTC), with the Indian side including Jaishankar, commerce minister Piyush Goyal and IT minister Rajeev Chandrashekar in Brussels.
At the press conference after the TTC, Jaishankar was asked about Borrell’s statement that the EU should be putting sanctions on refined Indian petroleum products using Russian oil.
“I really don’t see the basis for your question. My understanding of Council regulations is that if Russian crude is substantially transformed in a third country it is not treated as Russian any more. I would urge you to look at Council regulations 833/2014,” said Jaishankar.
After the Indian minister, EU’s executive vice president Margrethe Vestager also addressed the question, indicating that the matter was not closed.
“There is no doubt about the legal basis of the sanctions. Of course, it is a discussion that we will have with friends but it will be an extended hand and not with a point finger,” she said. “I echo that,” appended Borrell.
India has been identified as the top of a group of ‘laundromat countries’ that buy crude oil from Russia for their refineries and then sell the processed products to European countries. This automatically circumvents the European sanctions on Russian crude that have been imposed to pressurise Moscow over the Ukraine war.
In the FT interview, Borrell admitted that India’s purchase of discounted Russian oil was not being questioned, but expressed that the resale as refined products to Europe was difficult to accept.
“That India buys Russian oil, it’s normal. And if, thanks to our limitations on the price of oil, India can buy this oil much cheaper, well the less money Russia gets, the better,” Borrell said. “But if they use that in order to be a centre where Russian oil is being refined and by-products are being sold to us…we have to act.”
Targeting refined fuel exports would mark a significant step-change in the US-led sanctions regime, which has tried to balance a desire to curb Moscow’s revenues with the risks of losing too much supply from the global market. Adding to the complexity is the fact that existing sanctions, including those on Iran and Venezuela, have generally accepted that once crude is refined, it is no longer designated as being from the country the crude originated in. Indian refiners, for example, use crude from multiple different countries including Russia, explained the Financial Times, making identifying the exact origin of a barrel of diesel or gasoline challenging.
Borrell told the newspaper that any mechanism to stem the flow of Russian oil would need to be implemented “by the national authorities”, suggesting the EU could target buyers of Indian refined fuels they believe are derived from Russian crude. “If they sell, it is because someone is buying. And we have to look at who is buying,” he said.
Note: This article was originally published on May 16 at 9:31 pm, and republished on May 17 at 8:13 am with India’s response.