India leads in ‘laundering’ Russian oil and selling to Europe: report

Price cap coalition countries have increased imports of refined oil products from India, China, Turkey, UAE and Singapore that have become the largest importers of Russian crude, says Finland-based group, thereby circumventing the sanctions

India leads five countries named as the “Laundromat” countries that buy Russian oil and sell processed products to European countries, thus side-stepping European sanctions against Russia, says a Finland-based group that cited the latest figures for the first quarter of 2023.

The report, released last week, coincides with the latest data from analytics firm Kpler and a report by international agency Bloomberg that showed how European Union (EU) countries, which are all part of the “price cap coalition” that bars trade and insurance for any oil purchased above a certain price from Russia, are in fact increasing their intake of oil from India, China, Turkey, the UAE and Singapore.

The report also accused Indian sellers and European buyers of possibly “circumventing sanctions” by selling crude products from a refinery in Gujarat that is co-owned by Russian oil company Rosneft.

“Price cap coalition countries have increased imports of refined oil products from countries that have become the largest importers of Russian crude. This is a major loophole that can undermine the impact of the sanctions on Russia,” said the report, titled Laundromat: How the price cap coalition whitewashes Russian oil in third countries, by the Centre for Research on Energy and Clean Air (CREA).

European countries are simply substituting oil products they previously bought directly from Russia, with the same products now “whitewashed” in third countries and bought from them at a premium.

Of the so-called “laundromat” countries, India, which in April remained the highest global consumer of seaborne Russian crude for a fifth month, is ahead of all others in the export of crude products to the coalition countries, exporting nearly 3.8 million tonnes of oil products to price cap coalition countries, which include the EU, G-7 countries, Australia and Japan.

India’s exports of diesel, for example, tripled to about 1,60,000 barrels per day in March 2023, compared with the period before the Russian war in Ukraine, making diesel one of the largest components of India-EU trade at present.

The CREA report said the most oil products were being exported from two ports in Gujarat: the Sikka port that services the Reliance-owned Jamnagar refinery, and the Vadinar port that ships oil products from Nayara energies, which is partly owned (49.13%) by Rosneft, alleging that this could constitute “circumventing sanctions” imposed unilaterally by the U.S. and Europe.

“The port is of great value to the Russian oil industry, especially Rosneft,” the report said.

“This situation where a Russian company owns an oil refinery in a third country highlights a possible way of circumventing sanctions. Rosneft or other oil companies from Russia are free to transport crude oil to Vadinar, where it is refined and can be exported to the price cap coalition countries as oil products from India,” the report concluded, recommending that a “place of origin” certification should accompany oil products sold to Europe.

Neither the Petroleum Ministry nor the External Affairs Ministry responded to a request for a comment on the report, or the categorisation of India as an “oil launderer” for Russia.