Trump’s Iran war pushes India to rekindle old friendship with Russia
But just two months later, Delhi and Moscow are deepening their energy cooperation. Both sides agreed to prepare for Russia to resume direct sales of liquefied natural gas for the first time since the start of the Ukrainian war, according to two sources familiar with the matter. One of the sources said the talks could be completed within weeks if India decides to pursue the deal, which risks violating Western sanctions.
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Details of the talks, which took place at a time when energy prices were soaring triggered by the US-Israeli attack on Iran, had not been previously reported. Sources said the “verbal agreement” on LNG deal negotiations was reached between Russian Deputy Energy Minister Pavel Sorokin and Indian Oil and Gas Minister Hardeep Singh Puri at a meeting in Delhi on March 19.
The two officials also agreed to further increase crude sales to India, which would double January’s level to reach at least 40% of India’s total imports in about a month, three people familiar with their talks said.
India has become a major buyer of Russian crude oil, which was heavily discounted after the invasion of Ukraine, which became a point of contention with the Trump administration. The world’s third-largest oil importer and consumer bought nearly $44 billion worth of crude oil from Moscow last year, playing a vital role in keeping the Kremlin’s wartime economy alive.
Delhi has also told energy importers to prepare to resume purchases of Russian LNG, one of the sources said. India has approached Washington about waivers from possible sanctions, according to a second person familiar with the source and the request.
India’s foreign affairs and oil ministries did not respond to questions about the potential LNG deal before publication. When asked about the Reuters article at a briefing on Friday, external affairs ministry spokesman Randhir Jaiswal said the government’s energy policy is based on the need to meet the needs of 1.4 billion people, market dynamics and global conditions.
Indian officials also said they had purchased Russian liquefied petroleum gas, which is largely used for cooking and is not subject to sanctions.
Russia’s energy ministry declined to comment on any talks with India, while the US Treasury Department did not respond to questions about sanctions relief.
The White House and Ukraine’s embassy in Delhi did not respond to requests for comment.
“India has chosen the path that will best serve its national interests, based on a long-standing and trusted partnership with Russia,” said Ajai Malhotra, India’s former ambassador to Moscow.
Referring to Washington, he added that Delhi should now “seek exemptions or accommodations as a normal part of negotiations between strategic partners”.
DOUBLE DAMAGE
While India has attracted US attention for decades as a strategic counterweight to its neighbor China, the world’s fifth-largest economy has been shaken twice in less than a year by decisions largely initiated in Washington.
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Delhi, which has been buying crude oil from Moscow at discounted prices for years, sharply reduced purchases after Trump in August imposed tariffs as high as 50 percent on Indian goods, or among the most punitive taxes imposed on any country. The US Supreme Court has since ruled that Trump acted illegally in enacting such tariffs.
After the US and Israel attacked Iran on February 28, India’s calculus changed rapidly. Tehran’s retaliation included targeting ships in the Strait of Hormuz; This effectively blocked the narrow strip through which about half of India’s crude oil and LNG supplies pass.
Since then, long queues have formed outside some gas stations in India, and some restaurants have run out of cooking gas.
Demand for Russia’s energy exports, which avoid the Gulf when shipped to Asian customers, has risen sharply in the region’s economies.
India’s state-owned refiners began placing orders for additional purchases of Russian crude just hours before the United States announced a temporary exemption on March 5 that would allow Delhi to purchase some sanctioned cargoes. As oil prices continued to rise, Washington further loosened restrictions.
Some Indian policymakers complain that Delhi is cutting crude oil imports from Russia as a concession to the United States, according to a government document seen by Reuters.
In the briefing prepared for the cabinet secretariat on the Middle East crisis on March 20, it was said that “India had reduced its purchases of discounted Russian crude oil, which could have buffered the situation to some extent.”
He warned that a prolonged disruption of the flow of oil from the Middle East would lead to a series of economic difficulties that would “lead to higher inflation, a weaker currency and rising external debts”.
It was warned that export growth could take a hit of between 2 percent and 4 percent, and wholesale inflation could increase between 0.3 percent and 0.7 percent.
WARM-UP TIES
Russia, which has maintained friendly ties with India since the Cold War, is using its advantage.
Any new LNG deal would likely include less favorable terms for India compared to the 20-year supply deal India’s state-owned GAIL signed with Russia’s Gazprom in 2012, one of the sources said. “It’s become a seller’s market now,” the person said.
Executives at Russian state power grid company Rosseti, who are in Delhi for an industry summit this month, have also proposed working with their Indian counterparts on transmission facilities largely in mountainous and remote parts of the country, one of the sources said.
If an agreement is reached, this will be Moscow’s first step into the Indian power transmission sector.
Russia is also keen to expand air connectivity with India: St. Timofei Titarenko, a manager at St. Petersburg Pulkovo Airport, told Reuters last week that he was visiting Indian airports and exploring the possibility of more direct flights.
Kremlin Chief diplomat Sergei Lavrov told a conference on Indo-Russia relations this week that 96 percent of trade between the two countries is now conducted in rupees and rubles.
“The time-tested Russian-Indian friendship serves as an example of how interstate relations should and can be built on the basis of equality, mutual trust and respect and consideration of each other’s interests,” he said.
Rupee-Ruble transactions of up to $1 billion can now be processed in as little as a day, or twice as fast as a few years ago, a senior executive at the Indian branch of Russian lender Sberbank told a conference in Mumbai in March.
