US does not want 'rapid acceleration' in Indian energy imports from Russia

By Krishna N. Das

NEW DELHI (Reuters) -The United States will not set any "red line" for India on its energy imports from Russia but does not want to see a "rapid acceleration" in purchases, a top U.S. official said on Thursday during a visit to New Delhi.

Lured by steep discounts following Western sanctions on Russian entities, India has bought at least 13 million barrels of Russian crude oil since the country invaded Ukraine in late February. That compared with some 16 million barrels for the whole of last year, data compiled by Reuters shows.

"Friends don't set red lines," Daleep Singh, U.S. Deputy National Security Adviser for International Economics, told reporters, adding however that its partners in Europe and Asia had been urged to cut their reliance on "an unreliable energy supplier".

Singh spoke ahead of Russian Foreign Minister Sergei Lavrov's arrival in the Indian capital for a two-day trip.

Russia has long been India's biggest supplier of defence equipment, despite growing purchases from the United States in the past decade. Defence analysts say Russian supplies are more cost-competitive and vital for India as it faces a superior Chinese military.

Singh said the United States was ready to help India diversify its energy and defence supplies.

"We stand ready to help India diversify its energy resources, much like is the case for defence resources over a period of time. But there is no prohibition at present on energy imports from Russia," he said.

"What we would not like to see is a rapid acceleration of India's imports from Russia as it relates to energy or any other exports that are currently being prohibited by us or by other aspects of the international sanctions regime."

Washington has no objection of India buying Russian oil provided purchase are made at a discount to market rates, a U.S. government official told Reuters.

Russia is offering a discount of $35 a barrel to price levels prior to the start of the Ukraine crisis in February, Bloomberg reported on Thursday.

Indian Oil Corp has a contract with Russian oil company Rosneft that gives India's top refiner an option to buy up to 2 million tonnes, equivalent to about 15 million barrels, of Urals in 2022.

RUPEE-ROUBLE PAYMENTS

Singh also said the United States would not like to see its allies helping resurrect the rouble, which nosedived immediately after the war began but has recovered in recent days.

"We would not like to see mechanisms that are designed to prop up the rouble or to undermine the dollar-based financial system, or to circumvent our financial sanctions," he said.

Reuters has reported that India and Russia are trying to work out a rupee-rouble payments mechanism to maintain trade between the countries .

India and China count Russia as a friendly nation and neither has condemned Russia's attack on Ukraine. While India has abstained from voting on U.N. resolutions on the War, China has in some cases sided with Moscow.

China's Foreign Minister Wang Yi said after a meeting with Lavrov on Wednesday that Moscow and Beijing were "more determined" to develop bilateral ties and boost cooperation. They also condemned the Western sanctions on Russia.

Singh said the growing Russia-China bonhomie had consequences for India.

"Russia is going to be the junior partner in this relationship with China. And the more leverage that China gains over Russia, the less favourable that is for India," he said.

He said Russia cannot be expected to come to India's rescue in case of any future border escalations between India and China.

(Additional Reporting by Nidhi Verma; Editing by Sanjeev Miglani, William Maclean and Jane Merriman)

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