To strengthen the move, the country is opting for a fresh new address to fulfill its oil demand.
This month, the first cargo from new oil producer Guyana to India has departed from a production facility off the South American nation’s coast in a vessel chartered by trading firm Trafigura, data from Refinitiv Eikon showed on Tuesday.
It marks a major shift as India imports more than 80% of its oil needs and relies heavily on the Middle East. The country is the world’s third-biggest oil importer and consumer.
First Indian company to buy Guyanese crude
The cargo from Guyana was bought by HPCL-Mittal Energy Ltd, a joint venture between state-run Hindustan Petroleum Corp and steel tycoon LN Mittal, a source with knowledge of the matter said.
HMEL operates a 226,000 barrel per day (bpd) Bathinda refinery in Punjab.
Opec’s share in India’s oil imports
As Opec’s share in India’s oil imports fell to historic lows between April 2020 and January 2021, the refining powerhouse began making preparations to import Guyanese crude while renewing a key supply contract between top refiner Indian Oil Corp Ltd and Russia.
Earlier this month, Opec+ decided to extend production cuts through April.
What India’s oil minister said
Oil minister Dharmendra Pradhan has constantly urged Opec and OPec+ nations to increase production to meet the growing demand and balance pricing.
However, Opec decided to continue production cut and Saudi commented that India should use its strategic crude reserves to cool down prices.
Later, the oil ministry responded by asking refiners to speed up their diversification of crude sources and reduce reliance on the Middle East.
India had purchased 16.71 million barrels of crude in April-May, 2020 and filled all the three Strategic Petroleum Reserves created at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka.
The average cost of that crude purchase was $19 per barrel, according to Pradhan’s written reply to a question in the Rajya Sabha on September 21, 2020.
Cargo from Guyana to arrive in April
The 1 million-barrel cargo of Guyana’s Liza light sweet crude set sail on March 2 on Marshall Islands-flagged tanker Sea Garnet bound for India’s Mundra port, where it is set to arrive around April 8. The cargo’s charterer is Trafigura, according to the Eikon data.
Guyana’s natural resources minister, Vickram Bharrat, told news agency Reuters this month that the crude onboard the Sea Garnet had been originally allocated to New York-based Hess Corp, one of the companies producing crude in Guyana along with Exxon Mobil Corp, and delivered to Trafigura. Bharrat said he did not know the identity of the cargo’s ultimate buyer.
Since Guyana began exporting crude in early 2020, its oil has flowed mainly to the United States, China, Panama and the Caribbean, a tanker-tracking data showed.
India was a prominent importer of Venezuelan oil, but tight US sanctions on the South American country have since 2019 limited the volume India can buy, if it is even allowed.
India did not receive any Venezuelan crude imports in February for a third consecutive month due to Washington’s suspension of oil-for-fuel swaps between state-run PDVSA and Reliance Industries Ltd since October. That compares with 371,300 barrels per day (bpd) of Venezuelan oil that arrived in Indian ports in February 2020.
Besides Russia, North American producers Canada, the United States and Mexico have gained market share by selling heavy crude grades to India.
Close watch on Iran
In an interview with Bloomberg, Mukesh Kumar Surana – chairman of state-owned Hindustan Petroleum Corp Ltd – had said that Indian refiners are watching Iran’s possible re-entry into the oil market closely.
Iranian oil exports are still subject to US sanctions. India was one of Iran’s biggest buyers in Asia.
If the US lifts sanctions on Iran for oil production from its existing fields, it may bring relief to India.
(With inputs from Reuters)