India’s oil import from US a worthy move

It is happy augury that $100 million worth of American crude oil is all set to leave for India from Texas next month. This follows former US President Barack Obama’s decision two years ago to lift a long-standing ban on export of crude oil to India and Prime Minister Narendra Modi’s recent successful parleys with US President Donald Trump in Washington which opened the doors for US exports. At that June meeting, President Trump had promised to be a “reliable, long-term supplier” of energy for India’s developmental needs. Indian companies started purchasing crude from the US soon after Trump and Modi agreed to deepen the engagement in the energy sector. State-run oil refining and marketing giants Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL) placed orders for over four million barrels. IOC placed its first order in July and the second on August 10. BPCL made its first purchase of US oil, buying high Sulphur crudes Mars and Poseidon. It has bought a cargo containing 500,000 barrels each for delivery from September 26 to October 10. Hindustan Petroleum is also looking at buying US crude oil.

As the world’s third-largest oil importer, India joins South Korea, Japan and China in purchase of US oil after production cuts by OPEC (Organisation of the Petroleum Exporting Countries) drove up prices of West Asian heavy- sulphur content crude. Even after including the shipping cost, buying US crude is cost-competitive to Indian refiners. Over the next 20 years, India’s energy consumption growth is projected to be the fastest among all major economies and shedding the over-dependence on Gulf oil may be potentially good for this country. But with consumption increasing and production not keeping pace, selfsufficiency in this field is a distant dream. Indeed, India’s petroleum self-sufficiency fell to 17.9 per cent of the total consumption in 2016-17, lowest since 2011, according to data available with Petroleum Planning and Analysis Cell (PPAC).