HPCL-Mittal Energy Limited (HMEL) has stopped purchasing crude oil from Russia. This decision was made after new sanctions were imposed by the United States, the European Union, and the United Kingdom. The company's policy is in line with international sanctions and is being viewed under the umbrella of the Indian government's energy security strategy.
India russia oil trade: A major shift has been observed in India-Russia energy relations, as HPCL's joint venture company HMEL (HPCL-Mittal Energy Ltd) has completely halted its purchase of crude oil from Russia. The Bathinda-based refinery previously procured oil from Russia on a “delivered basis,” but recent US and European sanctions have made transportation and insurance risky. The company took this step following controversial reports related to sanctioned vessels, aiming to continue trade in compliance with international regulations and the Indian government's policies.
HMEL's Major Decision
HMEL, a joint venture between the Mittal Group and HPCL, has clarified that it will no longer import any new consignments of crude oil from Russia. The company made this decision following the stringent sanctions recently imposed on Russia by the United States, the European Union, and the United Kingdom. These sanctions are impacting not only oil but also shipping, insurance, and payment systems.
HMEL has become the first Indian company to openly announce its disengagement from Russia following these new sanctions. The company states that this move aligns with global regulations and the policies of the Indian government.
How Oil Was Supplied from Russia
HMEL operates a large oil refinery in Bathinda, Punjab. Until now, the company procured oil from Russia on a 'delivered basis.' This meant that the entire responsibility for bringing the oil from Russia to India rested with the Russian supplier. The supplier managed the vessel arrangements, its insurance, and transportation. HMEL received the oil directly at the Indian port.
However, with the new sanctions, this method has become risky. The US and the European Union have not only banned Russian oil but have also initiated action against vessels and companies that transport oil from Russia. This has increased international trading risks for buyers like HMEL.
Decision Taken After Controversy
HMEL's decision follows a controversy. A few weeks ago, a foreign media report claimed that the company had received oil supplies from sanctioned vessels. According to the report, HMEL had imported at least four consignments from such vessels, which were subject to Western sanctions. The value of these consignments was reportedly around $280 million.
Following this report, the company clarified that it had purchased oil on a 'delivered basis,' and the selection of vessels was made by the supplier. The company stated that it adheres to all government regulations and international trade standards.
Situation Changes as Halt is Placed on Cheap Russian Oil
According to the company, oil purchases from Russia continued as long as the process was safe and beneficial. However, as soon as new sanctions were implemented and challenges related to insurance and transportation increased, HMEL decided to halt oil procurement from Russia.
Energy sector experts suggest that this move could prove to be a significant turning point in India's energy supply policy. The supply of cheap oil from Russia has been beneficial for India, but now, due to sanctions, the situation appears to be changing.
