Following Prime Minister Modi's visit, India to buy US$1 billion of US crude
HOUSTON, Aug. 22, 2017 /PRNewswire-USNewswire/ -- Following the visit of Prime Minister Modi to the US in June 2017, where President Trump and PM Modi agreed to deepen the energy engagement between the two countries, India oil companies have started the process of procuring crude oil from the United States. Six weeks after the visit, the first orders for US$ 1 billion of crude are being placed.
Two Indian oil giants, Indian Oil Corporation and Bharat Petroleum, both Fortune 500 companies, have already taken delivery of the first 2 million barrels that have shipped from ports in Texas and Louisiana. The first shipments will reach Paradip (Odisha, India) in the last week of September. They are expected to be received by Minister of Petroleum and Natural Gas Dharmendra Pradhan.
President Donald Trump acknowledged this first shipment during his phone call on August 14, 2017, with Prime Minister Modi on the occasion of India's Independence Day. President Trump welcomed the first ever shipment of American crude oil to India. He pledged that the United States would be a reliable, long-term supplier of energy.
The Indian Ambassador to the United States, Navtej Sarna met the Governor of Texas Greg Abbott, Deputy Secretary of State John J Sullivan and Deputy Secretary of Energy Dan Brouillette to brief them about Indian plans to procure more US crude.
India is the third largest consumer of energy in the world following the US and China, and the 3rd largest importer of crude and the 4th largest importer of LNG. With over 1.2 billion population and a consistent GDP growth rate of over 7.5%, energy will be a key driver of the growth process in India. It is the fastest growing major economy of the world and is expected to remain the bright spot in global growth in the next two to three decades.
In terms of energy, India today consumes less than 5% of the world energy. However, this is going to accelerate and India is set to reach about 9% by 2035. Over the next 20 years, India's energy consumption will grow the fastest among all major economies. By 2035, China and India will have largest share of global demand (35%) overtaking even OECD (33%) and all other combined at 32%. Indian population will contribute an increase in consumption of around 300 million barrels per day per year for next few years. That is almost 30% of global incremental growth.
India has also developed itself into a refining hub with complex refineries that are exporting products to the world. These are state-of-art refineries, which can take a range of crude as input and give range of output product, given the very high level of complexity.
Indian oil companies are increasing their footprint in the United States. Four Indian public and private sector companies — GAIL, IOCL, Oil India and Reliance — have invested approximately US$ 5 billion in Shale assets. India will also source LNG from the United States. Indian companies have already contracted 9 MMTPA of LNG from the US and the first shipment is expected in January 2018.
Indian companies are contemplating placing monthly orders, if not more. This could boost bilateral trade by at least $ 2 billion.
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