NEW DELHI: The US just became India’s latest oil supplier, with the first shipment of crude landing in the country. The US had stopped oil exports in 1975, a ban lifted by former US President Barack Obama in 2015.
State-owned Indian Oil Corporation’s purchase of 1.6 million barrels arrived at Paradip, Odisha, on Monday, and was received by US and Indian officials.
MT New Prosperity, a very large crude carrier (VLCC), with a capacity to haul 2 million barrels, had left the US Gulf Coast on August 19. “IOC will process the crude at its refineries at Paradip, Haldia (in West Bengal), Barauni (in Bihar) and Bongaigaon (in Assam),” an IOC statement said.
State-owned Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd have also placed orders for about 2.95 million barrels and 1 million barrels of US crude, respectively, for their Kochi and Vizag refineries. “The total volume of the crude contracted by Indian public sector refineries is, therefore, 7.85 million barrels,” the statement said.
US officials estimate the present Indian oil buys could increase bilateral trade by almost $2 billion. The US embassy, in its own statement, said, “During their June 26 meeting in Washington, President Trump and Prime Minister Modi committed to expanding and elevating bilateral energy cooperation through a strategic energy partnership.”
Indian companies, both public and private, have invested about $5 billion in US shale assets. They have also contracted 5.8 million tonnes per annum of liquefied natural gas from the US and the first shipment is expected to be delivered to India in January 2018. India has encouraged state-controlled refiners to buy US and Canadian crude from the US Gulf Coast as it looks at cheaper alternatives that have emerged due to a global supply glut.
The second shipment is expected in a month’s time. India, the world’s third-largest oil importer, joins Asian countries like South Korea, Japan and China.