Two Gujarat ports exported the highest seaborne refined oil to Price Cap Coalition countries
Countries that banned Russian oil imports instead imported oil commodities worth €42 billion from India, China, United Arab Emirates, Singapore and Turkey after the war started on February 24, 2022, therefore classifying them as laundromats, according to a new study.
The five countries were thus identified as ‘laundromats’ for Western countries that banned imports of seaborne Russian-origin crude oil after the Ukraine invasion, by the Centre for Research on Energy and Clean Air (CREA) in their report.
The five countries are responsible for 70 per cent of Russia's crude oil exports, the study highlighted.
To safeguard and enhance the effectiveness of these sanctions, this briefing looks at third countries importing Russian crude oil and exporting it as refined oil products to the price cap coalition’s countries or regions, the authors of the report said, adding:
This is a way to skirt around the sanctions, still enabling Russia to receive revenues from crude oil, with the price cap coalition importing products made from Russian crude.
India emerged as the leading exporter of refined oil products at 3.7 million tonnes to Price Cap Coalition countries in 2022, the report showed. This is an increase of 0.3 million tonnes from the previous year.
This was followed by China at three million tonnes and the United Arab Emirates at 2.9 million tonnes, the report noted.
The Price Cap Coalition comprising Australia, Canada, the European Union, Japan, the United Kingdom and the United States imposed a maximum price of $60 a barrel of oil transported by vessels owned or insured by some countries in the alliance to third-party countries, with the intention to dent Russia’s financing of the war.
Since the beginning of the invasion, demand for Russian crude oil has increased significantly by China, India, Turkey, UAE and Singapore. China (57.7 million tonnes), India (55.9 million tonnes), Turkey (17.4 million tonnes), the United Arab Emirates (UAE, 1.0 million tonnes) and Singapore (0.5 million tonnes) increased imports of Russian crude oil in the prior year, importing €74.8 billion worth of oil in the 12 month period since Russia invaded Ukraine (February 24, 2022), the report noted.
The EU was the largest importer of oil products from the laundromat countries worth €17.7 billion, despite partially banning crude oil imports from Russia last year. This was followed by Australia (€17.7 billion), the USA (€6.6 billion), the UK (€5 billion) and Japan (€4.8 billion).
“The EU banned the imports of Russian oil products on February 5, 2023, and the Price Cap Coalition set two price caps for Russian oil products, starting on the same day. These price caps are $100 for products selling at a premium and $45 for other products,’’ the study said.
The Sikka port, located on the West coast of India in Gujarat, exported €2.7 billion worth petroleum products to the price cap coalition countries from December 2022 to February 2023.
It turned out to be the port with the most significant amount of import of seaborne crude oil from Russia, which is refined further by the Jamnagar refinery owned by Reliance Industries.
While the Indian port of Sikka recorded the highest amount of exports to the price cap coalition countries, the port of Vadinar, also on the west coast of Gujarat, followed as a close second.
Between December 2022 and February 2023, the Vadinar port served as a hub to export €0.4 billion worth of seaborne oil products to the price-cap coalition countries. Vadinar also imported €1.6 billion worth of seaborne Russian crude oil.
The Vadinar Oil refinery is owned by Nayara Energy Limited, of which Russian oil company Rosneft holds a 49.13 per cent share of Nayara Energy Limited.
“This situation where a Russian company owns an oil refinery in a third country highlights a possible way of circumventing sanctions. Rosneft or other oil companies from Russia are free to transport crude oil to Vadinar, where it is refined and can be exported to the price cap coalition countries as oil products from India,” the study said.
At the same time, it allows for collecting revenues for Russia by increasing demand for Russian crude that is refined in laundromat countries and sold to Price Cap Coalition countries, the authors of the report noted.
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