India plans to double crude oil imports from the United States as part of its effort to reduce dependence on the volatile West Asia region, three officials with direct knowledge of the matter have said, according to the Hindustan Times.
The news comes as Delhi said in November it is considering the option of importing Russian crude.
India’s oil purchases from the U.S., which started in 2017-18, have already crossed about 6 million tons a year. The country is also keen on long-term oil supply contracts with Russia and oil-producing countries in Africa, the officials said on condition of anonymity.
“We can easily double our crude oil imports from the US to 12 million tons. We are in talks with the U.S. government and private oil firms as petroleum is an unregulated business in that country. We expect good rates and better terms from American firms that would compensate for our transportation costs. In return, we can offer them an assured market,” one of the three officials said.
India is heavily dependent on oil imports from West Asia. Its top three suppliers in 2018-19 are from the area: Iraq, with about 46.6 million tons (MT) in 2018-19, is the number one supplier, followed by Saudi Arabia (40.3 MT) and the UAE (17.5 MT). Kuwait supplied 10.8 MT.
Together, these countries supplied about 51% of the total of 226.5 MT of oil worth $111.9 billion that India imported in 2018-19, they said. According to the government’s Petroleum Planning and Analysis Cell (PPAC), the data-keeper of the oil ministry, India’s crude oil import dependency on the basis of consumption was 83.8% in 2018-19. Put otherwise, 8.38 of every 10 liters of crude consumed in the country were imported.
Officials said the diversification of India’s crude basket is necessary because unlike other importers, it neither has its own resources nor has bought significant oil and gas assets abroad. India is the third-largest consumer of oil after the U.S. and China.
The importance is being given to Russia as an energy source, especially after the meeting between Prime Minister Narendra Modi and President Vladimir Putin at Vladivostok last September, the third official said. The two also signed a road map for cooperation in hydrocarbons for 2019-24.
A joint statement issued after the meeting welcomed the success in cooperation between Russia’s Rosneft and the Indian consortium of state-owned oil and gas firms. Modi and Putin said they would forge cooperation in the joint development of oil and gas fields in Russia and India, including offshore fields, and develop ways to deliver energy resources from Russia to India, including a long-term agreement for sourcing Russian crude.