India will source oil from wherever it is available, economically viable: FM Sitharaman

According to fresh market updates, Finance Minister Nirmala Sitharaman stated India will keep source energy from wherever it is available and economically viable, as disruptions in the Gulf tighten global supplies and the US puts pressure on countries buying Russian crude.

Her comments come against the backdrop of a US law that gives President Donald Trump the authority to impose tariffs of up to 100 percent on countries purchasing Russian oil and gas. Sitharaman stated moving away from Russian crude is not a straightforward switch, as India needs to secure supplies for a population of 1.4 billion and its refineries are configured to process particular grades of crude.

While India is diversifying its crude basket, the availability and cost of alternative supplies stay important considerations in any decision to reduce purchases from a particular source, she stated.

The sharper offering, according to Sitharaman, is whether alternative supplies would be available in sufficient quantities and at prices India can afford.

“We will choose to source our energy requirement from every corner of the world, and that which suits us, suits not for anything else, but for the availability,” Sitharaman stated at the BusinessLine Changemaker Awards on September 22.

Sitharaman stated replacing Russian crude with supplies from other markets could put further pressure on global crude prices because the available pool of crude is already tightening amid disruptions in the Gulf.

“With the attack in Saudi Arabia and some crossfire hit at some other Gulf-related refineries. The oil pool itself is coming down. India can get out of Russia and say all right, I'm buying oil from somewhere else. The moment you come out, the available pool, which is limited, is going to shoot up in price,” she stated.

She stated India’s energy requirement had to be met from multiple sources given the size of its population.

“And to replace all that we need for 1.4 billion people the requirement has to be met from so many different sources. Already, we are diversifying our oil basket,” she stated.

Refinery configuration poses constraint

The finance minister additionally highlighted a less visible constraint in replacing Russian crude — whether alternative grades can be processed by Indian refineries.

Sitharaman stated Indian refineries are largely suited to processing medium-sour crude in terms of both density and sulphur content. She questioned the economic rationale of shifting supplies if replacement crude was not compatible with the country’s refinery configuration.

“And whose cost are we then serving? So we need to be practical to see the citizens and Indian requirement of energy,” Sitharaman stated.

“It poses a severe challenge for that, but I think we will have to keep India's interest topmost,” Sitharaman stated.