New Delhi: In a move of diplomatic and economic significance, India on Monday received its first crude oil cargo of 1.6 million barrels from the US at the Paradip Port, Odisha . The consignment, ordered by Indian Oil Corp (IOC), will process the crude at IOC’s East-Coast base refineries, located at Paradip, Haldia, Barauni and Bongaigaon.
This development comes in wake of growing closeness between India and US under Prime Minister Narendra Modi and will further strengthen the ties between the two nations. Mr Modi and US President Donald Trump in their meeting in June this year had agreed to strengthen Indo-US hydrocarbon ties. It will help India diversify its source for crude as well as provide some advantage while negotiating with the West Asian countries for hydrocarbons.
In recent years, India has been keen to use its position as a large buyer of crude and gas to try to get negotiate better deals with oil and gas exporting countries. “Diversification in crude procurement will strengthen India’s energy security from geopolitical disruptions and also ensure price protection,” oil minister Dharmendra Pradhan said.
Indian companies have also contracted 9 MMTPA of LNG from the US and the first shipment is expected to be delivered to India in January 2018. Indian Oil which became the first Indian public sector refiner from India to source US crude has placed a cumulative order 3.9 million barrel from the US. Bharat Petroleum and Hindustan Petroleum, India’s two other public sector refiners have also placed orders for about 2.95 million barrels and 1 million barrels respectively for their Kochi and Vizag refineries from United States.
The total volume of the crude presently contracted by Indian public sector refineries is 7.85 million barrels. The three refiners are sourcing sweet, sour and heavy crudes for their refineries which are equipped to handle complex mix of crude oils. Indian companies, both public and private, have made sizeable investments in US shale assets with a total investment of approximate $5 billion.
Sunjay Sudhir, joint secretary (international cooperation) in the ministry of petroleum and natural gas said that the inclusion of the US as a source for crude oil imports by India’s largest refiner will go a long way in mitigating the risks arising out of geo-political disruptions. He hoped that the new arrangement would also usher in price stability and energy security for India, which is witnessing robust growth in demand for petroleum products.
