New Delhi/Mumbai: India and US plan to further strengthen their Strategic Energy Partnership that was launched in New Delhi in April last year. This may include larger energy imports from the US by the world’s third-largest oil importer’ state run firms such as Indian Oil Corporation Ltd. (IOCL).
Also, according to reports state-run Petronet LNG Ltd may ink a deal with US liquefied natural gas (LNG) developer Tellurian Inc for around $2 billion in the proposed Driftwood project in Louisiana.
This comes in the backdrop of Prime Minister Narendra Modi’s visit to the energy resource rich country where he will be addressing an energy round table in Houston on Sunday morning (India time). With China and India nearing an arrangement to form a buyers’ bloc, US has pitched itself as a preferred energy partner to India.
In a first, Indian Oil Corp., the country’s largest refiner, has also inked two term contracts totalling 4.6 million tonnes (mt) of US crude oil for 2019-20 from Norway’s Equinor ASA and Algeria’s state energy company Sonatrach. India is also sourcing liquified natural gas and oil from the US, with Indian firms investing $4 billion in US shale gas assets.
“There are some bottlenecks in US oil export infrastructure, which prevents berthing and loading of VLCCs (very large crude carriers) at the terminals. Smaller vessels are often not economical. They are working on de-bottlenecking and hope to complete it by January. If that happens, then why not (buy more US oil)," the Times of India quoted IOC chairman Sanjiv Singh in a report.
Modi’s meeting also comes in the backdrop of the drone attacks on Saudi Aramco’s production facilities that has caused the biggest-ever disruption in global crude oil supplies. Even as Yemen's Houthi rebels have claimed responsibility for the audacious attacks, the US has blamed Iran, further escalating tensions in the Persian Gulf.
“In Houston, I will interact with CEOs of leading energy companies in the US with the aim to enhance India-US energy partnership. Energy has emerged as a new area of mutually beneficial cooperation and is fast becoming an important facet of our bilateral relationship," Modi said in a 20 September statement.
Some of these companies include; Tellurian Inc., Exxonmobil, BP Plc, Cheniere Energy, Dominion Energy, and Total S.A. among others. Modi has been meeting with top executives of global oil companies and experts from the energy sector.
Mint reported on 16 May about ExxonMobil Corp., the world’s most valuable energy company, may shortly form a partnership with state-owned GAIL (India) Ltd to set up a green energy platform in India. Also, India is looking to secure an interest in Guyana’s oilfields that are being hailed as one of the world’s largest oil finds in recent times. ExxonMobil, one of the world’s largest publicly-traded energy firms, announced an estimated reserve of more than five billion oil-equivalent barrels in the offshore Stabroek block in the South American country.
US secretary of state Michael Richard Pompeo has promised India of adequate crude oil supplies even as India, the world's third-largest oil importer, has been trying to buffer its consumers from the spike in global prices. India's exports to the US in 2017-18 stood at $47.9 billion, while imports were at $26.7 billion.
India’s petroleum minister Dharmendra Pradhan has been in touch with US energy secretary Rick Perry in the backdrop of volatility in crude oil prices and to minimise its impact on Indian consumers. Four working groups have been created under the Strategic Energy Partnership—oil and gas, power and energy efficiency, renewable energy and sustainable development.
The inaugural meeting of the US-India Strategic Energy Partnership was held in April 2018 in New Delhi and was attended by Perry, who had then pitched the US as a preferred energy partner.
The cost of the Indian basket of crude, which averaged $47.56 and $56.43 a barrel in FY17 and FY18, respectively, was $59.35 in August, according to data from the Petroleum Planning and Analysis Cell. The average price jumped to $63.67 a barrel on 18 September. The Indian basket of crude represents the average of Oman, Dubai and Brent Crude.