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Replacing China as Russia’s Strategic Energy Partner
India Replaces China as Key Energy Ally
Context: With China hardening its stance on energy imports, Russia is pivoting toward India for long-term, mutually beneficial energy cooperation. From crude oil to small modular reactors, the Indo-Russian energy alliance is reshaping global geopolitics.
Russia’s Post-Oil Strategy Finds a Lifeline in India
- As Western sanctions intensify and oil prices remain subdued, Russia’s post-oil survival strategy is undergoing a major transition.
- With Urals crude oil trading around US$53 per barrel, well below the fiscal breakeven of US$69.70, Moscow faces mounting financial strain.
- While China initially absorbed a significant share of Russian crude post-2022 sanctions, China’s energy diversification and assertive bargaining on LNG have exposed the limits of that partnership.
- Amid these shifts, India has emerged as Russia’s most reliable and strategic energy partner, offering a commercially-driven, geopolitically stable alternative to China.
China’s Waning Leverage vs India’s Strategic Rise
- Since 2020, China has been a dominant buyer of Russian energy. In 2024, Russia became China’s largest crude oil supplier, exporting over 108 million metric tons (MMT) — approximately 20–22% of China’s total oil imports.
- However, this relationship is largely one-sided.
- Key infrastructure projects like the Power of Siberia 2 pipeline, designed to export 50 billion cubic meters of gas annually to China, remain stalled.
- Meanwhile, China continues demanding deep price concessions, including gas rates at par with Russian domestic prices — far lower than what Moscow once charged Europe.
- Even with a 3.3% rise in Russian LNG exports to China in 2024 (reaching 8.3 MMT), Russia lags behind Australia and Qatar in China’s LNG import rankings.
- Chinese firms such as CNPC, holding stakes in Yamal LNG (20%) and Arctic LNG 2 (10%), further tilt the balance in Beijing’s favour by leveraging financial control to negotiate steep discounts.
- In stark contrast, India’s relationship with Russia is built on commercial pragmatism, transparency, and mutual benefit.
- As of May 2025, India became Russia’s largest oil buyer, with crude imports reaching 2 million barrels per day (mb/d) — a two-year high.
India’s Energy Strategy: Smart, Strategic, Sustainable
- India’s energy partnership with Russia has gone beyond just oil imports.
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- Indian refiners, benefiting from strong diesel and jet fuel margins, import discounted Russian crude, refine it, and export the products to Europe — a process that circumvents Western sanctions while bolstering India’s economy.
- India’s refining and maritime sectors have adapted efficiently, collaborating with Russian insurers to secure marine insurance outside Western-dominated systems.
- This not only safeguards energy flows but also reinforces India’s energy sovereignty.
- Unlike China’s leverage-based approach, India’s energy cooperation with Russia is transactional and respectful, without political overreach.
- This has positioned New Delhi as a preferred partner for Moscow during a critical economic period.
From Crude Oil to Clean Energy: A New Frontier
- Since 2022, India’s imports of Russian crude have increased more than tenfold, now constituting over 30% of India’s oil basket, compared to near-zero levels before the Ukraine war.
- But the Indo-Russian energy partnership is evolving beyond fossil fuels.
- At the recent India-Russia Business Dialogue, six major joint ventures were announced in sectors like shipbuilding, pharmaceuticals, and critical minerals.
- The most notable is the collaboration on small modular reactors (SMRs).
- An MoU signed between Maharashtra and Russia’s ROSATOM aims to build India’s first thorium-based SMR, offering a clean, scalable, and flexible nuclear power solution.
- This move aligns with both nations’ long-term strategy to diversify energy sources and reduce carbon footprints.
OPEC+ Frictions and Russia’s Global Energy Play
- Despite being a key member of OPEC+, Russia’s compliance with production limits has been inconsistent.
- In early 2024, Russia exceeded its quota by 480,000 b/d, contrasting with stricter cuts required of Iraq (1.93 mb/d) and Kazakhstan (1.3 mb/d) through 2026.
- OPEC+ plans to raise production by 411,000 b/d starting May 2025, aiming for a total recovery of 2.2 mb/d.
- However, this highlights internal rifts, with Saudi Arabia favouring price stability while Russia prioritises export volumes to support its fiscal needs.
- These geopolitical dynamics are forcing Moscow to look beyond OPEC+, making India an increasingly vital energy partner.
Green Energy Divergence: Russia’s Blue Hydrogen vs India’s Green Future
- Russia’s Energy Strategy 2035 still leans heavily on hydrocarbons, with 60% of energy investments focused on Arctic LNG expansion — targeting 140 MTPA output.
- While Russia plans to capture 20–25% of the global hydrogen market, its focus remains on blue hydrogen, derived from gas infrastructure.
- India, however, is betting on green hydrogen. With a $2.5 billion National Green Hydrogen Mission and a target of 5 MMT annual production by 2030, New Delhi is leading the charge toward a sustainable, renewable energy ecosystem.
- This divergence offers synergy: India offers innovation and clean technology goals; Russia provides legacy infrastructure and natural resources — together building a complementary energy alliance for the 21st century.
As China asserts its dominance and the West enforces sanctions, Russia’s energy pivot toward India is both strategic and necessary. India’s consistent, commercially grounded energy ties are helping Russia weather global economic headwinds.
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The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH
