India is gradually reducing its dependence on the oil-rich sheikhdoms of the Middle East and the member countries of the Organisation of Petroleum Exporting Countries (OPEC) for its crude supplies.
In a written reply, Rameswar Teli, the Minister of State for Petroleum & Natural Gas, informed the Rajya Sabha that the country has started sourcing crude oil from across several geographical locations to ensure the security of crude oil supply lines by easing dependence on any single region.
This had been done “to ensure the security of crude supplies and to mitigate the risk of dependence on crude oil from a single region,” said a Ministry of Petroleum & Natural Gas release quoting the minister in the upper house.
In financial year 2020-21, the country imported a substantial part of its crude oil supplies from Iraq, the US, Nigeria, Saudi Arabia and the UAE. Overall, the Middle East’s share in the country’s import basket of oil was over 50 per cent, followed by Africa and the US.
The decision by the 14-member OPEC in the April-June quarter of 2020 to cut crude oil supply by a record 9.7 million barrels — about 10 per cent of the global output — led the central government to fast-track its review of international oil supply contracts. The subsequent rise in domestic fuel prices further exacerbated the search for alternatives from non-OPEC countries.
Oil public sector undertakings like Indian Oil Corp Ltd (IOCL) have diversified their purchase from across geographies to also include Africa, the Americas and Australia. The US, Russia, Canada, Australia, Brazil, Guyana, Norway, Egypt, Gabon, Ghana, Congo, Equatorial Guinea, Libya and Nigeria were among countries from where crude is additionally being sourced.
Kirit Parikh, chairman and founder of New Delhi-based energy think-tank Integrated Research and Action for Development (IRADe), said, “This diversification in our sources of import makes us less vulnerable to cartelisation attempts by global suppliers. However, we mustn’t forget that while our dependence on imports is growing our domestic production has failed to keep pace.”
Parikh suggested that the country must continue to explore alternative sources of energy like ethanol to reduce its dependency on imported crude.
India is the world’s third-largest consumer of oil and is heavily dependent on imports. In FY 2020-21, India produced 30.5 MMT of crude, while it imported 198.1 MMT of the commodity worth $62.7 billion during the same period.