As part of India’s push for a gas based economy, state run Indian Oil Corporation Ltd (IOCL) is expected to ink an agreement with ExxonMobil, one of the world’s largest publicly-traded energy firms, and Chart Industries Inc. for transporting gas through containers during the US President Donald Trump’s visit to India, said two people aware of the development.
The proposed plan in the works is to provide gas access in regions where the gas grid is not present and comes in the backdrop of US pitching itself as a preferred energy partner to India.
“There has been an MoU (memorandum of understanding) with ExxonMobil that was inked last year for LNG initiatives in India. The idea is to strengthen it," said an Indian government official requesting anonymity.
India is the world’s third-largest oil importer and the fourth-largest buyer of liquefied natural gas (LNG). The country is a key Asian refining hub, with an installed capacity of more than 249.4 million tonnes per annum (mtpa) through 23 refineries.
Given the instability in the energy markets following the tensions in the Persian Gulf and the Coronavirus outbreak, the US shale oil and gas production plays an important role in bringing global price stability. US has also emerged as a growing source for oil and gas for energy import dependent India with the total value of crude and LNG imports from the U.S. estimated at around $ 6.7 billion.
The strategic India-US Strategic Energy Partnership was launched in New Delhi in April 2018, wherein four working groups have been created—oil and gas, power and energy efficiency, renewable energy and sustainable development.
Higher energy prices stoke inflation and hurt the country’s economic growth. India is also exploring to secure an interest in ExxonMobil operated Guyana’s oilfields that are being hailed as one of the world’s largest oil finds in recent times.
During Indian Prime Minister Narendra Modi’s week-long visit to the US in September last year, Modi met chief executives of 17 US energy majors such as Exxonmobil, BP Plc, Cheniere Energy, Dominion Energy, and Total S.A. among others at the energy round table held at Hotel Post Oak, Houston.
With state-run Petronet LNG Ltd plans to invest in Tellurian Inc’s US Gulf Coast project, energy has cemented its place as the new bridge in the India-US bilateral relationship. Petronet will spend $2.5 billion for an 18% equity stake in the $28 billion Driftwood LNG terminal, the largest outside holding so far in the project, and negotiate the purchase of 5 million tonnes of gas per annum.
India has been expanding on its energy partnership with the US that includes increase in quantum of energy imports and US help in building its strategic petroleum reserves. The value of US crude oil imports by India jumped from $609.47 million in 2017-18 to $3588.91 million in 2018-19. It stood at $3746.3 million for April-December 2019 period.
India is the sixth-largest buyer of US LNG and has been sourcing the cleaner fuel and crude oil from the US, with Indian companies investing $4 billion in US shale gas assets. LNG imports from the US increased from $155.17 million in 2016-17 to $527.14 in 2018-19. It stood at $576.28 million for April-December 2019 period.