NEW DELHI: Petroleum minister Dharmendra Pradhan on Monday discussed volatility in crude oil prices and its impact on Indian consumers with US energy secretary Rick Perry.
The telephone conversation came in the backdrop of tightening US sanctions on Iran, and production curbs by the Organization of the Petroleum Exporting Countries (Opec). India had kept its option open to buy oil from Iran, with former foreign minister Sushma Swaraj informing her visiting Iranian counterpart, Javad Zarif, in May that New Delhi will take a decision after the national elections, which concluded last month.
India was among Iran’s top oil buyers with imports of 23.5 million tonnes in 2018-19. However, with the US’s conditional waiver for Iranian oil imports to eight countries, including China and India, expiring on 2 May, India has stopped all oil imports from the Persian Gulf nation. While sourcing crude from other suppliers is not an issue, the price at which it is bought will impact the Indian economy.
“Both the ministers discussed about the ways to work together to enhance energy security, further develop gas-based economy in India, to expand energy and innovation linkages to bolster the strategic India-US Strategic Energy Partnership that was launched in New Delhi in April last year. They also reviewed the current status of four working groups created under the Strategic Energy Partnership—oil and gas, power and energy efficiency, renewable energy and sustainable development. They agreed to hold the second meeting of the India-US Strategic Energy Partnership at an early date," the oil ministry said in a statement.
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. Mint had 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 two strategic rivals have made progress on joint sourcing of crude, with Li Fanrong, deputy administrator of China’s National Energy Administration, visiting New Delhi in March. Fanrong’s visit followed India’s oil secretary M.M. Kutty’s visit to Beijing in October.
“They also discussed about crude oil price volatility. Minister Pradhan emphasised the impact of price volatility on Indian consumers. He also pointed out to the important role that the US plays in bringing global price stability. US emergence as a source for oil and gas for India also figured during the call. Both ministers agreed to work closely to improve the overall engagement between the countries in the energy sector," the statement added.
Since India imports over 80% of its crude needs and 18% of natural gas, higher energy prices stoke inflation and hurt the country’s economic growth. In a first, Indian Oil Corp., the country’s largest refiner, has also inked two term contracts totalling 4.6mt 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.