India’s energy imports soar in April-December 2022, Russian crude imports stay high

Due to the sanctions by the European Union and the West, Russia began diverted its oil supplies to Asian countries including India and China at discounted rates.

Energy imports by India jumped in the nine months ended December as domestic demand remained high amid the global energy crisis. Among imported commodities, the highest surge was reported in petroleum, crude and petroleum products, followed by coal, coke and briquette, according to the data released by Ministry of Commerce & Industry on January 16.

During April-December this fiscal, the country's overall exports rose by 9 percent to $332.76 billion. Imports during the period increased by 24.96 percent to $551.7 billion.

Crude imports from Russia on a high

India imported petroleum, crude and related products worth $163.91 billion in April-December, up almost 46 percent year-on-year.  Russia was the fourth biggest importer to India as imports rose 399.73 percent year-on-year rise in April to December 2022. Imports from Russia rose from $6.58 billion from April to December 2021 to $32.88 billion in 2022, likely to have been driven by crude. India stepped up it import of crude oil from Russia as the latter offered discounted rates.

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The European Union and the West have imposed multiple sanctions on Moscow since Russia’s invasion of Ukraine. Due to the sanctions, Russia began diverted its oil supplies to Asian countries including India and China at discounted rates.

India is the world's third largest consumer and importer of crude oil, where it imports 85 percent of its crude oil needs and then converts it into fuels such as petrol and diesel at local refineries.

Energy tracker Vortexa said Russia was the top exporter of crude oil to India in December, supplying 1.17 million barrels per day (bpd) during the month, surpassing its traditional suppliers such as Saudi Arabia and Iraq.

According to the experts, Russia is expected to retain the position of top supplier of crude oil to India in the medium term unless the latter faces some regulatory pressure.

India has benefited from buying cheaper Russian crude oil as it saved thousands of crores of rupees. Top Indian government officials have defended the country’s decision to buy Russian oil stating that their utmost moral duty lies with the consumers.

Coal imports on fire

India imported coal worth $40.55 billion in the first three quarters of 2022-23, up close to 87 percent on year as the domestic production was not enough to fuel the steep rise in power demand.

India generates almost 60 percent of its electricity from fossil fuel. With climate change becoming a reality, countries across the world have been making a stronger commitment to reduce the use of what is described as the “dirtiest fuel” by climate change activists – coal. But the year 2022 witnesses renewed interest in coal in countries from Europe to Asia after the energy crisis after Russia invaded Ukraine sent gas prices into a tizzy.

In March-April, parts of India’s power demand rose significantly as parts of the country experienced heatwaves and industrial demand picked up post easing of Covid restrictions. Parts of the country faced blackouts as coal levels dwindled as power generation units.

The central government initially advised states and power utilities to import coal and blend it to run plants at high capacity. But the situation worsened and the center invoked an emergency clause of the Electricity Act (section 11) and made it mandatory for all thermal power plants to run on full capacity and import coal.

While this order was only valid till December 31, the power ministry has asked all generation companies to use imported coal to the extent of 6 percent of their requirement, anticipating a shortfall of 24 million ton at thermal power plants for the first six months of 2023-24.