India has massively expanded export markets for its refined petro products in the last one year, commerce ministry data for April showed, thanks to discounted Russian oil that came gushing in the wake of the Ukraine war.
The increase was significant in the case of Argentina, Ecuador, Egypt, Iraq, Mauritius, Nigeria and Sudan (see chart alongside). There was also a rise in oil export to European countries including Germany, Italy, Portugal and Spain in April. To be sure, the increase comes on a low base, considering that India’s oil product exports to several of these countries were minuscule.
Interestingly, such exports also saw a sharp rise to the UK and the Netherlands, which are already large export markets for India.
The rise in oil exports to European countries could be attributed to the European Union’s decision to place a ban on the import of Russian diesel, as well as other oil products in February 2023, which impacted operations of several major European refineries, said Prashant Vasisht, senior vice-president and co-group head of corporate ratings at ICRA Ltd.
“My interpretation (on rising oil export to new markets in Africa) is that major oil refinery hubs like the one in Rotterdam (Netherlands), which was exporting to these markets, have been impacted. So, many African countries are now getting their requirements from India,” added Vasisht, who leads the oil and gas sector at the agency.
India is a key refining hub in Asia, with an annual installed capacity of 250 million tonnes across 23 refineries.
India has boosted oil imports from sanctions-hit Russia which is selling oil at a discount. Russia has replaced the Middle East as India’s largest oil supplier.
According to the Directorate General of Commercial Intelligence and Statistics under the commerce ministry, oil imports from Moscow rose three-fold to $4.64 billion in April from $1.2 billion a year earlier.
The Netherlands continued to be India’s top export market for petroleum in April, after replacing China last year. India exported oil and oil products worth over $1 billion to the Netherlands during the month, accounting for a sixth of total outbound shipments.
Oil exports to the UK grew by 204% to $199 million, and those to Italy were up 6431% to $89 million. African countries like Nigeria and Mozambique reported a 15720% and 130% growth in shipments at $353 million and $218 million, respectively.
“Some countries are constrained to flexibly refine crude due to inability to secure supplies from sanctioned sources”, said Deepak Mahurkar, partner at PwC, and an expert in energy sector.
“India has mega refineries and wherewithal to decide where to buy from. Both, our capabilities and international trade freedom (India has), we can (increase) export to other countries,” added Mahurkar.
However, India’s overall oil exports were down 18% in April 2023 at $6.63 billion compared to $8.13 billion in the corresponding month last year, largely due to softening of international crude oil prices. Average crude oil price in April 2023 hovered at around $82 per barrel compared to $103 per barrel in April 2022.
Overall, India’s crude oil imports during the month declined by 17.22% to $18.78 billion compared to $22.69 billion during the same period last year. As a result, India’s oil trade deficit narrowed by 16% to $12.15 billion during the month, compared to $13.86 billion in April 2022.
