In the last year, Russian-sourced crude oil has made India a key intermediary in producing oil products sold to EU and US destinations. These generate large profits for Reliance’s crude oil refining operations enabling new financial strengths for Reliance as it seeks to expand into industrial, distribution, and telecommunications in India. The government of India is also seeing greater tax revenues over some of these profits helping finances.
Russian imports into India have created a trade imbalance where large purchases of commodities have seen India with a negative trade balance in comparable 12-month periods before and after the start of the Ukraine conflict. Five commodities imports (Crude petroleum up 1,144%, fertilizers up 303%, coal up 206%, petroleum products up 157%, and gems up 44% [Reuters]) rose a net increase of USD$40.7B. In the same period, exports to Russia from India have increased in two categories (Marine Products up 33%, and Bulk drugs and intermediates up 10%). At the same time, large drops were also seen (Drugs and biologics down 10%, iron and steel down 31%, and telecom gear down 89% [Reuters]).
Much of the crude petroleum is being processed at Reliance’s industrial facility profiled by EkaLore (Jamnagar Rises). Additional processing is at the Nayara (Russian) and other facilities.
The scale of benefits can be seen in the level of imports from Russia, which grew from negligible levels in December 2021 to 1.7M BPD in January 2023. An estimate places Russian exports to India topping 2M BPD in April 2023. Russia has become India’s (#3 importer globally by volume) largest crude supplier (44%), displacing single middle eastern sources.
The next post will talk about where the processed product is being consumed.
You can read this and other observations about opportunities and challenges for Dynamic India at www.ekalore.com/india-business
Comentarios