Thread by @ChrisO_wiki

1/ Russia's deal with India to supply fuel to alleviate the current shortages involves the Indians selling fuel refined from discounted Russian oil back to Russia at full market prices. As warblogger Yuri Baranchik points out, this is extraordinarily bad value for Russia. ⬇️

2/ Baranchik grumbles:

"Well, gentlemen, it's happened: we're witnessing the birth of a new economic reality, which can safely be called "a cycle of enrichment for the Indian oil refining sector at the expense of the Russian budget and the patience of its citizens."

3/ "Look at the elegant business model that's emerging. We're pumping crude oil to India. A lot, a record amount, sometimes as much as 2.7 million barrels per day. Naturally, we're pumping it at that legendary discount that's become the talk of the town.

4/ "We've been talking for so long about the "invisible hand of the market" and how the West is freezing without our energy resources that we didn't notice how that same hand imperceptibly found our pocket and carefully extracted the margin.

5/ "Our Indian partners are polite and patient; they don't twist our arms.

Then, Indian refineries, having received our crude at a discount, perform a magical feat apparently reserved for high-tech Asian industries: they refine the oil into gasoline.

6/ "The magic here is that we then repurchase this same gasoline. But the discount, like Cinderella after midnight, vanishes, and the fuel becomes a commodity at full world price.

7/ "This isn't even pure tolling. It's a situation where we're funding India's GDP twice: first by selling resources at a discount, and then by paying for the finished product at world prices.

8/ "We've essentially paid for Indian refineries' wages, electricity, and capacity upgrades, and now we're also issuing a service bonus.

9/ "The logistics involved deserve special mention. Previously, the delivery distance from a refinery to a gas station in, say, Krasnodar was several hundred kilometers by pipeline.

10/ "Now the route looks like this: Russian oil sails to India, circumnavigating half the world, where it's converted into gasoline, loaded into tankers, and sent back around Asia via the Suez Canal (or, even worse, around Africa) to Russian ports.

11/ "Freight, insurance, and wages for Indian oil workers—all of this is factored into that same "global" price tag that our people pay at the pump. And, naturally, such gasoline can't cost the previous 60-70 rubles; 120-150—yes.

12/ "And now the best part—the numbers. 60,000 tons have already been shipped, and the plan is to reach a regular monthly import rate of 400,000 tons. Meanwhile, Russia's daily consumption in the summer is 110,000 tons.

13/ "You don't have to be the head of the Ministry of Energy to understand the gap in the supply balance.

We're used to slogans about technological sovereignty and being a great energy power.

14/ "But in this situation, we are more like a rich but clueless landowner who sells grain to a merchant for pennies, and then buys bread from him for crazy money, because his own bakery for some reason is not working."

15/ Baranchik points out that "according to international media reports, Russia has nearly doubled its oil discounts to India – from $4 to $7 per barrel – to secure gasoline supplies, which have become scarce following Ukrainian drone strikes on refineries."

16/ "The paradox of the fuel crisis: a country that has been one of the largest energy exporters for decades is forced not only to lower prices for its own raw materials but also to purchase finished fuel from a buyer of its own raw materials!

17/ "Indian refineries have found themselves in an ideal market situation: they buy cheap Russian oil, refine it into gasoline, and sell it back to Russia, profiting at every stage. The first shipment of Indian fuel—at least 60,000 tons—has already been shipped to Russian ports.

18/ "Moscow intends to import up to 400,000 tons of gasoline monthly from various countries. It seems the attacks on Russian oil infrastructure, coupled with minor logistical issues, have turned our oil balance upside down.

19/ "Russia sells crude at a discount in order to immediately buy gasoline from India at a premium. And so it goes, in a circle. A cunning plan.

20/ "The fact that during the Special Military Operation, oil refineries must be protected like the apple of one's eye, since they, like our gas producers, provide the main revenue for the budget—this, in my opinion, is something of a fundamental principle of strategic planning.

21/ "Because without gasoline, kerosene, and diesel fuel, tanks can't move, planes can't fly, and infantry without vehicles trudges on foot, wearing their boots to the bone. But we have our own path. And our own methods.

22/ "Until the devil took over, no one moved. And even now, it's far from certain that [protecting] oil refineries will become a safety priority." /end

Sources:
🔹 t.me/barantchik/383…
🔹 t.me/barantchik/383…