India in unique position of sourcing energy from US, Russian oil giants
Sandeep Dikshit
Tribune News Service
New Delhi, February 23
When Petronet consummates the deal for investing in the American company Tellurian’s LNG project on the sidelines of US President Donald Trump’s visit on Tuesday, India will earn the unique distinction of being an investor in both geopolitical rivals Russia and the US.
The continuing purchase of crude from the US is due to the need to lower India’s bilateral trade surplus. The expansion of oil investments in Russia suggests India’s urgency to capitalise on the opening up of its hitherto closed Far East and Arctic Circle. But energy investments in both countries not only convey proximity to the two foremost military powers, they also signals a conscious decision to reduce dependence on oil from the volatile Middle-East where India reckons the tensions will continue to vitiate economic arrangements.
Though the first oil deal was discussed between Barack Obama and Manmohan Singh, it is Trump and Modi who have added substantial muscle to energy ties. Senior officials reckon that India has already bought $7 billion of oil from the US but Energy Secretary Dan Brouillette is aiming higher in order to achieve parity with Russia.
In addition to holding talks on LNG infrastructure and investments by Indian PSUs in US gas and oil, Brouillette will be keen to mark some sort of progress in Westinghouse’s 15-year-old quest to set up nuclear power plants in India. While the US did much of the heavy-lifting to secure a Nuclear Suppliers’ Group exemption to India, it is Russia which has set up two such power plants and is close to completing the third one.
But nuclear plants take up to a decade to materialise and India is trying to secure as much oil as possible from other sources after the Houthi-directed drone attack on a Saudi Arabian refinery last year. The CEO of Russian oil giant Rosneft Igor Sechin landed in India three days after the attack and oversaw an a nonbinding cooperation agreement between four Indian oil companies – BPRL, IOC, OVL and OIL – and the Russia’s Eastern Cluster oil exploration project while both sides set up a joint group to plan India’s participation in Vostok project taking shape as the world’s biggest project in modern day oil industry.
Though India’s existing relationships with West Asian oil producers will continue, it plans to source all incremental oil and gas from elsewhere due vagaries of the region’s politics. The killing of Iranian General Qasim Suleimani has further increased worries about stability in West Asia. Sechin was back in New Delhi this month and supervised the signing of IOC’s first term contract with Rosneft for importing 2 mmt of crude oil during 2020 to India.
“The addition of Russia as a new source for crude oil imports by India’s largest refiner will go a long way in mitigating the risks arising out of geo-political disruptions. The new arrangement would also usher in price stability and energy security for India, which is witnessing robust growth in demand for petroleum products. It will also open up the avenues for other PSU oil refiners to enter into similar term contracts for import of Russian crude oil,’’ said official sources.
