New Delhi (Sputnik) — Diversifying the energy dependency, India has received the first US crude oil cargo of 1.6 million barrels bought by Indian Oil Corporation from the United States on Monday at Paradip port. The step is seen as Indian strategy to lessen its dependency on OPEC countries for its oil demands. This is also being seen as an attempt by India to exert pressure on OPEC to slash prices and stop charging a premium from Asian buyers.
MT New Prosperity, a very large crude carrier, having a capacity of 2 million barrels of crude, had left US Gulf Coast on 19th August for Paradip port. IndianOil, an Indian state-owned company, will process the crude at its East-Coast based refineries, located at Paradip, Haldia, Barauni and Bongaigaon.
This is the part of a plan mooted by the Indian government to cut crude import cost from the Organization of the Petroleum Exporting Countries (OPEC) and to increase the quantity of crude oil from countries outside the organization.
“The inclusion of the US as a source for crude oil imports by India’s largest refiner will go a long way in mitigating the risks arising out of geopolitical disruptions. I hope that the new arrangement would also usher in price stability and energy security for India, which is witnessing robust growth in demand for petroleum products,” Sunjay Sudhir, Joint Secretary (International Cooperation) in the India’s Ministry of Petroleum & Natural Gas said.
Three state-owned refiners of India have together placed an order of 7.85 million barrels crude from the US till now. Indian Oil has placed a cumulative order 3.9 million barrel, Bharat Petroleum and Hindustan Petroleum have placed orders for about 2.95 million barrels and one million barrels respectively for their Kochi and Vizag refineries from the US. India, world’s third-largest crude oil importer, is also increasing crude import from Russia as Ural crude as it has been costing less to Indian refiners as compared to Oman. In the first half of this year, Indian refiners have purchased approximately 1.5 million ton Russian crude which was supplied from Black Sea port.
Apart from importing crude from the US, Indian oil companies, both public and private, have made sizeable investments in US Shale assets with a total investment of approximate US $ 5 billion. Indian companies have also contracted for LNG from the US and the first shipment is expected to be delivered to India in January 2018.