India looks at buying more US oil to reduce West Asia dependence

Competitive prices and cheaper transportation cited for shift; government cautious of importing large quantities
India looks at buying more US oil to reduce West Asia dependence

NEW DELHI: On October 2, the first in a series of shipments of US crude oil to India arrived at Odisha’s Paradip port. Two more vessels carrying a combined 3 million barrels are set to arrive in November, according to a senior official with Indian Oil Corporation (IOC). This is likely to become a regular feature at many Indian ports, with many Indian refineries likely to place orders for purchase of crude oil from the US.

However, the government is cautious of high import of oil. A senior oil ministry official said Prime Minister Narendra Modi has reiterated time and again the need for cutting oil import dependence.
“Our interest in US crude is about quality and competitive price,” said a senior official in Reliance Industries Ltd.

A Reuters report that India was set to emerge as a key market for American crude exports in the coming months, as refineries were ramping up “test” purchases of US grades to diversify imports.

US exports recently set a weekly record with nearly 2 million barrels of crude a day sent overseas. But shipments to India have been rare, with just a few deliveries since the US lifted its ban on crude exports in late 2015.

The US had stopped oil exports to India in 1975. But following recent commitments to US oil purchases by the IOC and Bharat Petroleum (BPCL), the two firms have placed orders for over 2 million barrels from the US. American crude oil shipments to India have the potential to boost bilateral trade by up to $2 billion.

“US crude was costly and India was dependent on West Asia. But with abundance of shale gas in the US, there is surplus crude. And also, over the years, logistics and transportation costs have come down,” said Gaurav Moda, oil and gas expert and partner, KPMG India.

US President Donald Trump, during his meeting with Prime Minister Modi, affirmed that the US would continue to remove barriers to energy development and investment in the US and to US energy exports so that more natural gas, clean coal, and renewable resources and technologies were available to fuel India’s economic growth and inclusive development.

“Today, the landed cost of crude from the US is competitive to West Asia. In addition, the changes in India-US relations have made the US do more business with India, in addition to being a big market,” said Moda.

Crude oil imports fell by 3.7% in august 2017: govt

According to the latest report of Petroleum Planning & Analysis Cell under the Ministry of Petroleum & Natural Gas, crude oil imports decreased by 3.7 per cent during August 2017 compared to August 2016

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