*
Russia has become India's main supplier of oil
*
The West has introduced price caps on Russian oil
*
Russia faces difficulties with oil price-making mechanism
By Nidhi Verma and Arunima Kumar
BENGALURU, India, Feb 6 (Reuters) - Europe will no
longer set the reference price for Russia's flagship Urals
crude, Igor Sechin, the CEO of Russia's oil major Rosneft said
on Monday, now Asia has emerged at the largest buyer of Russian
oil since the West placed it under sanctions.
Around 70% of January-loading cargoes of Russian Urals oil
is destined to India, according to traders' preliminary data and
Reuters calculations. The country has been a leading buyer of
the Russian grade for several months, filling the void left by
European buyers.
At the same time, Russia has become the largest supplier of
oil to India, replacing Iraq.
Speaking at an energy conference in India, Sechin, a
long-standing ally of Russian President Vladimir Putin, said the
Russian oil price would be established outside Europe.
"If Russian oil does not enter the European market, then
there is no reference price. Reference prices will be formed
where oil volumes actually go," said Sechin, who is also known
as the "Russian oil tsar".
He also quoted from the Bible to underline his point.
"As it's scripted in Ecclesiastes: what is crooked cannot be
straightened; what is lacking cannot be counted."
Since Russia invaded Ukraine almost a year ago, the West has
progressively tightened sanctions on Russian oil.
In December, the Group of Seven, the European Union and
Australia enforced a price cap on crude oil at $60 per barrel,
aiming to reduce Moscow's ability to finance its military
efforts in Ukraine and preserve stability on the global oil
market.
The European Union has also banned purchases of Russian oil
supplied in tankers by sea.
According to Russia's Finance Ministry, the average price of
Russian Urals oil in January was $49.48 a barrel down 42% on
January 2022.
The Russian government has debated how to calculate
Russia's taxable oil price following the EU's import ban and the
lack of a reliable price-making mechanism.
Moscow relies on income from oil and gas - last year around
11.6 trillion roubles ($165 billion) - to fund its budget
spending, and has been forced to start selling international
reserves to cover a deficit stretched by the cost of its
military operation in Ukraine.
When asked if Russia will give an additional stake to ONGC
Videsh or other Indian companies in its Sakhalin-1
project, Sechin told Reuters on the sidelines of the Indian
Energy Week conference that the decision to do so lay with the
Russian government.
Russia last year approved the requests of ONGC Videsh, the
overseas investment arm of state-run Oil and Natural Gas Corp , and Sakhalin Oil and Gas Development Co (SODECO), a
consortium of Japanese firms, to retain their 20% and 30% stake
respectively in the project.
(Reporting by Nidhi Varma, Deep Vakil, Shariq Khan, Arunima
Kumar and Florence Tan in Bengaluru; Editing by Kim Coghill,
Louise Heavens and Barbara Lewis)
