India and China are set to roll out a buyers’ bloc to bargain collectively for crude oil purchases as US sanctions on Iran threatens to inflate oil bills. The two countries are finalising the ‘time schedule’ and ‘detailed agenda’ for the first meeting of a joint working group (JWG) on energy, said a government official, requesting anonymity.

The group will not only discuss oil purchases, but will also extend to liquefied natural gas (LNG), including cargo swap options for gas. The potential tie-up, which is expected to have a major bearing on the global energy architecture, will also see the two countries look at alternative fuels such as shale oil and gas, and gas hydrates, said the official cited above. “We are working on a possible meeting of the JWG soon. The idea is to make the meeting very productive."

The US said recently that it will not extend the exemptions to eight countries, including China and India, from its sanctions against Iran from 2 May. US commerce secretary Wilbur Ross said recently that the US could not ensure supply of cheaper oil to India, following the sanctions on Iran, as the commodity is controlled by private companies. “We have to work out the time schedules and detailed agenda," said the official. “The cooperation arrangement is a work in progress," said a second official, also requesting anonymity.

China and India have been top buyers of Iranian oil. According to S&P Global Platts, Iranian oil exports averaged 1.7 million barrels per day (bpd) in March, with China accounting for 628,000 bpd and India another 357,000 bpd.

Queries emailed to spokespersons of India’s petroleum and natural gas ministry, and the Chinese embassy in New Delhi on 6 May remained unanswered.

India is also trying to stitch a wider alliance with Japan and South Korea, the world’s fourth and fifth-largest oil importers, to better bargain with West Asian crude oil producers, which charge a so-called ‘Asian premium’.

Mint reported on 26 April about China and India nearing an arrangement to form a buyers’ bloc and reduce the influence of the Saudi Arabia-led cartel on oil prices. The strategic rivals have made progress on joint sourcing of crude oil, with Li Fanrong, deputy administrator of China’s National Energy Administration, visiting New Delhi in March. Fanrong’s visit followed India’s petroleum secretary M.M. Kutty’s visit to Beijing last October.

“Ideally, that’s our hope. It (the larger grouping) is not necessarily at this point becoming a reality. While we attempted it earlier, we found that there are many pulls and pushes in this arrangement simply because there are countries that work against this group coming together," said the first official cited above.

The energy engagement comes after the Wuhan summit in April 2018 between Prime Minister Narendra Modi and Chinese president Xi Jinping.

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