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SOURCE: The Telegraph

India offers a back-door for imports of Russian oil into Britain, new figures suggest, blunting Britain’s efforts to restrict funding for the Kremlin. British energy buyers have stepped up imports from India’s biggest refinery, which itself has stepped up crude imports from Russia, according to trade data.

It suggests buyers have replaced some imports directly from Russia with imports from Russian-fed refineries, indirectly supporting Russian oil flows. Such a supply chain is entirely legal under UK rules, but the data has raised concerns that British efforts to cut off cash to the Kremlin are being undermined.

Oleg Ustenko, adviser to Ukraine’s president Volodymyr Zelensky, said companies were “exploiting weaknesses in the sanctions regime”.

“The UK must close the loopholes that undermine support for Ukraine by allowing bloody fossil fuels to continue flowing across our borders,” he said.

China and India have stepped up purchases of discounted Russian oil shunned by some traders in the West since Russia’s invasion of Ukraine began.

The giant Jamnagar refinery on India’s west coast imported 215 shipments of crude oil and fuel oil from Russia during 2022, four times as much in volume as it bought in 2021, Kpler data analysed by Global Witness shows.

At the same time, the UK has imported 29 shipments, or 10m barrels, of diesel and other refined products from Jamnagar since the war began, compared to seven shipments, or 4m barrels, during 2021. Buyers include Shell, BP, Trafigura, PetroChina and Essar.

Refineries tend to import from several sources and mix fuels together, meaning crude oil from Russia is likely to have been used to make diesel exported from India to the UK, though it is not possible to say for certain exactly what goes into each barrel.

“Pre-conflict, it was pretty rare for Indian refiners to process Russian crude,” says Alan Gelder, refining expert at Wood Mackenzie. “Now, about one in five barrels of the crude oil that they process is Russian.

“They [Indian refiners] have always exported to Europe, but they are exporting more now because it’s more attractive as Europe’s diesel prices are higher: it’s shorter of diesel because of the Russia-Ukraine conflict.

“A big chunk of that diesel they produce now will be based on Russian crude oil.”

Steve Sawyer, director of refining at Facts Global Energy, says India and China “are exporting diesel – and some of it will have come from Russia.”

He stresses that Western restrictions on Russian oil were not designed to stop Russian oil exports altogether, because of their importance to the global market.

The UK only banned Russian oil and diesel imports on December 5. Under those rules, an imported barrel is deemed to have come from the last country where “substantial processing” took place.

This means that crude oil from Russia that is refined into diesel elsewhere, such as in India, can perfectly legitimately be imported into the UK. The rule stems from longstanding tax rules, though campaigners fear it amounts to a loophole that supports Russian coffers.

Seven shipments from Jamnagar have arrived in the UK since the ban on Russian oil and diesel imports came into force last month.

Louis Wilson, senior campaigner at Global Witness, said: “Exploiting this loophole by bringing Russian oil in the back door puts money in the Kremlin’s pocket, violates the spirit of the UK’s embargo and undermines BP and Shell’s condemnation of the war in Ukraine.’’

Shell said: “Shell made its decision to withdraw from all Russian hydrocarbons with conviction. We are delivering on this, in line with guidance from European governments, including the UK, and in full compliance with sanctions, applicable laws and regulations.

“Under continued guidance from such governments and through our tight internal controls, including strict no Russian-origin product contract clauses with suppliers, we are seeking to avoid fuels that may contain products refined in Russia.”

BP said: “BP takes compliance with sanctions and export controls very seriously and seeks to comply with all applicable regulatory frameworks around the world. We continue to have very strict processes and controls for maintaining compliance with applicable trade sanctions, including the UK’s Russia sanctions.

“We conduct thorough checks on all trading counterparties and certificates of origin and other documents are used to evidence the origin of products.”

A Government spokesman said: “In light of Putin’s illegal invasion of Ukraine and weaponisation of energy, the Government has taken steps to end all imports of Russian fossil fuels including a ban of oil and oil products. Importers must be able to provide proof that goods are not of Russian origin.”