India to diversify its oil import sources
India is looking to diversify its import sources of crude oil and is considering purchasing the fuel from Guyana, Canada, Gabon, Brazil and Colombia amid a global rush away from gas, said two officials aware of the development.
“We aim to diversify our sources of oil imports. Currently we are looking at Brazil, Guyana, Gabon, Colombia and Canada,” said one of the two officials mentioned above.
Although, Brazil, Colombia and Gabon already supply crude to India, the quantity is not significant and India is now looking to increase the imports from these countries. According to data from the ministry of commerce, India imported crude oil worth $722.54 million from Brazil in April-July 2022.
Colombia has supplied oil worth $717.40 million so far in this fiscal. Guyana has supplied $106.06 million worth of crude so far in this fiscal. Supplies from Brazil, Colombia and Gabon account for 1.13%, 1.27% and 0.16% of the oil imports made by India so far in FY23.
India has been seeking to widen the pool of countries that sell crude in order to achieve energy security and cater to the growing domestic fuel demand. The Ukraine conflict has accelerated the process.
Queries sent to the union ministry of petroleum and natural gas remained unanswered till press time.
During a visit by Brazil’s minister of mines and energy Bento Albuquerque in April, the minister talked to his Indian counterpart, Hardeep Singh Puri, minister for petroleum and natural gas on a range of subjects in the energy space. The joint statement released following their meeting said: “The Indian side expressed interest for sourcing crude oil under long-term special contracts.”
Recent talk of a possible price cap on Russian energy supplies by the US and the European Union, and Russia’s threat to completely halt supplies to Europe in retaliation have heightened fears of a global energy crisis and its eventual impact on India, which imports nearly 85% of its fuel requirement.
Russian state-owned Gazprom has already stopped the flow of gas to Europe via Nordstream 1, prompting several industries in Europe to shift from gas to oil.
According to estimates by Platts Analytics, global oil demand from the gas-to-oil switch could jump by more than 80% over the next six months. Europe has already turned to West Asia and the Mediterranean region to source oil and concerns of further cuts in supplies from Russia will accelerate their efforts to look at alternative sources of oil.
This is expected to result in European countries further diversifying their import sources, resulting in a global supply squeeze.
Last week, speaking at an event, minister Puri said India has the capacity to exercise some leverage as it is a large buyer.
Regarding imports from Russia, he said: “Earlier it was 0.2%, we bought more in March, April, May and June and other countries also gave more. It will continue; it is market determined.”