1. US oil cheaper than Dubai oil for India? Believe it or not, but that is true

US oil cheaper than Dubai oil for India? Believe it or not, but that is true

The shipment follows recent commitments to US oil purchases by IndianOil (IOC) and Bharat Petroleum (BPCL), both of which have placed orders for over 2 million barrels from the US.

By: | Published: October 3, 2017 3:47 AM
US oil, US oil vs Dubai oil, US oil in india, dubai oil in india, US crude oil, US crude oil shipment, IndianOil, IOC, Bharat Petroleum, India US bilateral trade, MaryKay Carlson, energy efficiency technologies, Narendra Modi,  Indo-US trade, Gulf Coast, US Shale assets As per a report, the US crude oil is per barrel cheaper to India, compared with the most-imported Dubai crude. (Image: Reuters)

As part of the two million barrels contracted by India, the first shipment of US crude oil arrived here at Paradip Port in Odisha on Monday. The shipment follows recent commitments to US oil purchases by IndianOil (IOC) and Bharat Petroleum (BPCL), both of which have placed orders for over 2 million barrels from the US. As per a report, the US crude oil is $2 per barrel cheaper to India, compared with the most-imported Dubai crude. The shipment at Paradip was met by US consul general to Hyderabad Katherine Hadda, joint secretary for international cooperation in the petroleum ministry Sunjay Sudhir, and joint secretary (Americas division) in the ministry of external affairs (MEA) Munu Mahawar. While the US crude oil shipments to India have the potential to boost bilateral trade by up to $2 billion, this is one of the first shipments to India since the US stopped oil exports in 1975.

According to a US embassy statement, MaryKay Carlson, chargé d’affaires at the US embassy in New Delhi said, “This event marks a significant milestone in the growing partnership. The US and India are elevating our cooperation in the field of energy, including plans for cleaner fossil fuels, renewables, nuclear, and cutting-edge storage and energy efficiency technologies. We look forward to working together on further sales of US crude and exploring opportunities to expand the role of natural gas in India.”

During their June 26 meeting in Washington, US President Donald Trump and Prime Minister Narendra Modi committed to expanding and elevating bilateral energy cooperation through a strategic energy partnership. Energy trade between the nations is set to expand as India is taking steps to enhance the use of natural gas in its energy mix. India is also expanding its infrastructure for piped natural gas and liquefied natural gas used in cooking.

Calling it a new chapter in the history of Indo-US trade, particularly in the oil and gas sector, in a statement released by the MEA, Sudhir said 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. He expressed hope that the new arrangement would also usher in price stability and energy security for India. MT New Prosperity, a very large crude carrier (VLCC), of capacity 2 million barrels of crude, left US Gulf Coast on August 19.

IndianOil will process the crude at its east coast-based refineries, located at Paradip, Haldia, Barauni and Bongaigaon. IndianOil, which became the first Indian public-sector refiner to source US crude, has placed a cumulative order of 3.9 million barrels from the US. BPCL and Hindustan Petroleum, India’s two other public-sector refiners, have also placed orders for about 2.95 million barrels and 1 million barrels, respectively, for their Kochi and Vizag refineries from the US.

The total volume of the crude currently contracted by Indian public-sector refineries is, therefore, 7.85 million barrels. The three refiners are sourcing sweet, sour and heavy crudes for their refineries which are equipped to handle complex mix of crude oils. Indian companies, both public and private, have made sizeable investments in US Shale assets with a total investment of approximately $5 billion.

Indian firms have also contracted LNG from the US and the first shipment is expected to be delivered to India in January 2018. Both India and the US are the world’s largest and third largest consumers of energy, respectively.

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    Jan 22, 2018 at 6:04 am
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    1. S
      Salman merchamt
      Oct 4, 2017 at 2:18 pm
      Wht about common man ..how do v benefit...the nation is gone blind over sweet talks and false promises tell me honestly how many of u have made profits and how good is ur bussiness after new govt came in power..how many accidents rapes murders riots and communist comments have been made after the new govt has come inn.. mon people b honest ...so called ache din r forcing farmers to commot sucide so called ache din have ruined bussiness of our nation ..seriously friends lets not fight on petty issues lets come to gather neither a muslim hates hindu nor a hindu hates muslims is caste politics played by all political parties lets not give in2 it ...let there b any govt but v the people need to raise our voice for the wrongs happenning ...i m a muslim but an indian first and i feel proud to say bharat mata ki jai ..vande mataram...cause my religion has tought me that country first no matter what happens...so those who dont agree r not muslims but they just wear an attire of a muslim pc
      1. R
        Oct 4, 2017 at 1:09 pm
        Whatever be the price in international market no matter who the vendor is, it won’t reflect to us , the common people. Our end will always be like this.
        1. P
          Oct 4, 2017 at 12:42 pm
          There isn’t no oil in DUBAI. It’s just a trading post probably for Abu Dhabi oil with some middlemen taking a big cut
          1. R
            Oct 3, 2017 at 6:21 pm
            Fantastic news...long live I Indo---american friendship...down with terrorist so sorry Saudi Arabia ....
            1. bammbamm
              Oct 3, 2017 at 3:11 pm
              Hahahahaha. Look at the comments of the pathetic, educated, middle classes of India. All complaining why the benefit not passed to people. Can't see this is just a strategic move to move away from oil so that India can truly be independent. Middle class nationalism is nothing more than screaming Bharat Mata Ki Jai. Pathetic people. Narrow minded people.
              1. Jayesh Sheth
                Oct 3, 2017 at 11:17 am
                Believe or not retail price will go up.
                1. S
                  Oct 3, 2017 at 9:42 am
                  US shake crude is cheaper by 2$ but the refining process is more expensive and its has much lower yield compared to Middle East oil in fact this will not only offset the lower cost but it will be costlier than ME oil after processing. India is buying crude form US not for a cost advantage but for political and strategic reasons. Also US started exporting oil after more than 40 years
                  1. S
                    Oct 3, 2017 at 9:42 am
                    Shale crude
                    1. John Ssb
                      Oct 3, 2017 at 2:01 pm
                      Lol do you even know what u r saying? Lol
                    2. N
                      Oct 3, 2017 at 9:15 am
                      Until the benefit is passed on to the Consumer / Common Man this news doesn't help the citizens. And our politicians blatantly made statements in the past of fuel being expensive due to hurricane in a country from which we just got the first consignment!
                      1. Jaijawan Jaikisan
                        Oct 3, 2017 at 8:14 am
                        India is not buying much military hardware from USA though USA insists on it, its good to compensate it with oil buy to maintain equilibrium in relations with USA and Russia both.
                        1. Suresh Kuruganti
                          Oct 3, 2017 at 7:38 am
                          India can avail the opportunity of advantageous pricing but India has to provide adequate storage facilities also at strategic locations so that the country will get maximum benefit .
                          1. Dilip Kare
                            Oct 3, 2017 at 7:25 am
                            When we buy oil from Dubai, we pay price based on Brent, which is always 2-3 USD higher than the West Texas crude, the US price basis.
                            1. C
                              Oct 3, 2017 at 7:09 am
                              If you know what it means, American oil is traditionally sour whereas oil from the middle east is sweet. Our refineries are setup to process sweet oil and the additional cost to purify sour oil will offset some part of the price advantage, if true.
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