Crude Politics, Cruder Profits: How India Earns From Azerbaijan While Arming Armenia
When Azerbaijan resumed crude oil exports to India this August after a 10-month pause, it was seen as a minor trade headline. But the story runs deeper. The shipments themselves are negligible, yet India continues to draw significant profits from its stakes in Azerbaijan’s oil fields, even while bolstering Armenia with arms. This duality illustrates how New Delhi separates economic interests from diplomatic confrontations, prioritizing strategy and profit over sentiment.
The deterioration in ties began when Azerbaijan aligned closely with Pakistan, repeatedly backing Islamabad’s narrative on Kashmir at the Organisation of Islamic Cooperation and other platforms. The Turkey–Pakistan–Azerbaijan triangle amplified this hostility, particularly during the Nagorno-Karabakh conflicts. India, in turn, deepened its partnership with Armenia, providing Swathi radars, drones, and rocket systems since 2020, positioning itself as Yerevan’s reliable defense partner against Baku’s camp.
While geopolitics created distance, India’s oil diplomacy took a very different route. ONGC Videsh, the overseas investment arm of India’s oil sector established in 1965, has always carried the mandate of securing equity oil across the globe. In 2013, during the UPA government led by Prime Minister Manmohan Singh and Petroleum Minister Veerappa Moily, ONGC Videsh acquired a 2.72% stake in Azerbaijan’s flagship Azeri–Chirag–Guneshli (ACG) fields and 2.36% in the Baku–Tbilisi–Ceyhan (BTC) pipeline from Hess for about one billion dollars. A decade later, in 2024, the Modi government under Petroleum Minister Hardeep Puri expanded the footprint by spending another $60 million to buy additional shares from Equinor, bringing India’s holding to 3.336% in ACG and around 3.1% in BTC.
The returns from these stakes may look modest in volume but are notable in value. The ACG complex produces close to 400,000 barrels a day, of which India’s share comes to about 13,000 barrels. That is only 0.25% of India’s daily consumption, but on an annual basis it amounts to nearly 5 million barrels. At $80 a barrel, this translates to around $380 million in gross value each year. The crude itself is not shipped to India in large quantities, yet the profit flow is steady and low-maintenance, giving ONGC Videsh resources to reinvest in other international ventures.
This is where the contradiction becomes stark. On one hand, India positions itself as Armenia’s defense partner, standing against the Pakistan–Turkey–Azerbaijan axis. On the other hand, it quietly co-owns oil production with Azerbaijan’s SOCAR and draws revenue from fields in Baku. For Delhi’s energy planners, this contradiction is manageable—equity oil is about financial returns, not flag planting. For diplomats, it underlines how India’s economic policies can run on a different track than its strategic alignments.
In the end, the picture is clear. India has chosen to keep politics and profit apart. Even when Azerbaijan sides openly with Pakistan, New Delhi maintains its equity stake and converts it into steady earnings. That money feeds back into India’s global energy ambitions while the defense partnership with Armenia continues unabated. Rather than being an embarrassment, this dual approach is an example of India’s pragmatic diplomacy: refusing to let emotions rule, relying on calculation, and turning adversaries into reluctant sources of revenue.
