Representative image of an oil plant.
Credit Reuters File Photo
New Delhi: The Indian government has neither directed its oil companies to halt nor continue the purchase of Russian oil, instead allowing them the freedom to make procurement decisions purely based on economic considerations, HPCL's chairman said on Friday.
Russian crude oil made up for just 13.2 per cent of all the crude that Hindustan Petroleum Corporation Ltd (HPCL) processed into fuels like petrol and diesel in the April-June quarter, and a complete stoppage of oil from Moscow will not have any "significant" impact, HPCL chairman Vikas Kaushal said at an investor call.
US President Donald Trump earlier this week announced he would impose an additional 25 per cent tariff on US imports from India -- raising the overall duty to 50 per cent -- as a penalty for the country's continued imports of Russian oil.
Since the steep tariffs are likely to hit the USD 27 billion of non-exempt exports that India does to the US, there has been chatter around stopping or curtailing oil imports from Russia.
There is "no guidance or direction from the government to either stop or (continue) importing" Russian oil, Kaushal said. "We are free to do" imports based on purely commercial merits, he said.
India was the largest importer of Russian crude, purchasing 1.6 million barrels per day in July. However, it has not placed any orders for August and September, mainly because the discounts that initially encouraged Indian refiners to import oil from the Black Sea have decreased to about USD 2 per barrel.
With such a minimal price advantage compared to other internationally available oil, Indian refiners did not place any orders for August and September.
Oil companies typically secure import contracts about two months in advance, meaning the supplies for August and September were arranged before Trump's August 7 announcement of higher tariffs.
India is currently stepping up efforts to diversify its crude import basket further.
Kaushal stated that the Russian crude forming just 13.2 per cent of the entire crude intake in HPCL's refineries was purely driven by commercial reasons and not geopolitics.
Economics dictated that only the Vizag refinery of HPCL processed Russian crude in Q1 while Mumbai looked at other sources, he said. "It's not because of any geopolitical reason. It was an economic decision based on what we needed to run in our refineries."
He went on to add that even in a scenario where all of the Russian crude oil has to be replaced, "it will not have any significant commercial impact".
HPCL remains open to buying Russian oil if it becomes competitively priced again, he said, adding that the company would be able to absorb the financial loss for not processing Russian oil.
The company processed 6.66 million tonnes of crude oil in the April-June quarter.