Iranian oil imports ban: India to tap other markets for its crude requirement

By: |
Updated: April 24, 2019 7:52 PM

In 2018 India’s import of crude from Iraq exceeded what it imports from Saudi Arabia. Also, India became the biggest market for Mexican crude with the possibility of it growing more.

These companies are looking at different areas of cooperation in the oil sector which include areas like exploration and production; refining, processing and purification of hydrocarbons.

To meet shortfall arising from the cut in Iranian oil imports, India is considering US offer for supply of oil and gas worth $3 billion. The government is also looking at increasing supplies from other countries including Saudi Arabia, UAE, Mexico, Brazil, and Colombia. Iran has been a major source of supply account for nearly 10% of India’s oil imports.

Last year in September the Trump administration had offered India oil and gas at concessional rates comparable to Iran. Officials from both countries have been in talks to work out a deal which will be profitable to both sides, claimed sources.

A top diplomat confirmed on condition of anonymity that “The biggest issue of getting from US is the transport costs. As Iran offers to India cheaper freight and a 60-day credit period to Indian Oil Corporation, Mangalore refinery and petrochemicals (MRPL) and Nayara Energy (formerly Essar Oil).”

India has been exploring possibilities of increasing imports from other oil producing countries when imports from politically unstable countries including Venezuela and Libya virtually stopped. The US on Monday had announced that it had asked countries like Saudi Arabia which is a member of OPEC, UAE to increase their output.

In 2018 India’s import of crude from Iraq exceeded what it imports from Saudi Arabia. Also, India became the biggest market for Mexican crude with the possibility of it growing more.

The Financial Express Online had earlier reported that Mexico, which has become one of the top producers with its production at 110 mt, has now become one of the most reliable sources of crude for India’s energy security.

Almost 75% of its bilateral trade with India is of crude oil which has witnessed an increase of 36 percent over the previous year. From 8.36 million barrels in 2010, Mexico has in 2017-18 sent 50.89 million barrels to India.

Crude from South America

There have been several rounds of meetings and discussions with various countries in the region including Colombia, Mexico, and Brazil seeking more crude to meet India’s growing energy requirements.

In 2018, India imported oil from Colombia worth $ 400 million, which was almost 60 per cent higher than 2017.

Sources have indicated that in view of the Iran sanctions, oil imports from these far flung countries will go up. And, Indian companies have been looking at the companies in the region to increase crude imports which is expected to go up to 50 per cent over the next few years.

These companies are looking at different areas of cooperation in the oil sector which include areas like exploration and production; refining, processing and purification of hydrocarbons.

Besides exploring five wells, ONGC Videsh has operations in the Llanos field in Colombia’s Orinoco and explored five wells. And it also owns 50% of the Mansarovar, in a joint venture with the Chinese company Sinopec.

Ecuador too has already signed a confidentiality agreement with ONGC Videsh and both sides have been in discussions about new blocks available in that country.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1India’s exports up 46% to $14 bn during June 1-14
2Cabinet approves hike in DAP fertiliser subsidy by Rs 700 per bag
3RBI likely to maintain status quo in August policy: SBI report