India to double US oil imports and cut reliance

INDIA plans to double crude oil imports from the US as part of its effort to reduce dependance on the volatile West Asia region, three officials with direct knowledge of the matter said.

Oil purchases from the US, which started in 2017-18, have already crossed about six million tonnes a year. India is also keen on long-term oil supply contracts with Russia and oil producing countries in Africa, the officials said on condition of anonymity.

“We can easily double our crude oil imports from the US to 12 million tonnes. We are in talks with the US Government and private oil firms as petroleum is an unregulated business in that country.

“We expect good rates and better terms from American firms that would compensate for our transportation costs. In return, we can offer them an assured market,” one of the three officials said.

India is heavily dependant on oil imports from West Asia. Its top three suppliers in 2018-19 are from the area: Iraq, with about 46.6 million tonnes (MT) in 2018-19, is the number one supplier, followed by Saudi Arabia (40.3 MT) and the UAE (17.5 MT). Kuwait supplied 10.8 MT.

Together, these countries supplied about 51 per cent of the total of 226.5 MT of oil worth $111.9 billion or Rs 7.83 lakh crore that India imported in 2018-19, they said.

According to the Petroleum Planning and Analysis Cell (PPAC), the data-keeper of the oil ministry, India’s crude oil import dependency on the basis of consumption was 83.8 per cent in 2018-19.Put otherwise, 8.38 of every 10 litres of crude consumed in the country was imported.

Officials said the diversification of India’s crude basket was necessary because unlike other importers, it neither had its own resources nor had bought significant oil and gas assets abroad.

India is the third-largest consumer of oil after the US and China.

India’s efforts in recent years have resulted in diversification of energy sources with the focus on secure, stable and predictable supplies, a third official said, also on condition of anonymity.

Efforts have also been made to change the energy mix, with a push for including more renewable sources, he added.