Energy Independence in India: How First-Ever U.S. Crude Shipment to India Independence? (Important) (Download PDF)

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India received first shipment of US crude oil of 1.6 million barrels, purchased by state-run Indian Oil Corporation (IOC) at Paradip Port in Odisha imported on MT New Prosperity, a very large crude carrier (VLCC) that left US Gulf Coast on August 19, 2017 and arrived at Paradip port.

Image of Energy Independence in India

Image of Energy Independence in India

Image of Energy Independence in India

India’s Dependence on Oil and Gas?

India is spending $330 million a day on imported oil and gas with current demand for imported coal, oil, and natural gas is significantly outpacing domestic production

  • Coal: From a mere 2 % of overall coal consumption in 1990, imports made up 16 % of coal consumed in 2012, with the imported resources costing twice as much as those produced domestically.

  • Natural Gas: Between 2000 and 2012, the consumption of natural gas doubled, and a dependency on imported gas was established, growing from zero to 22 % of consumed natural gas.

  • Oil: In 1990, India imported 37 % of oil it consumed while in 2012 it imported a staggering 82 % of consumed oil, pushing the import bill to $120 billion and making it the energy source with the highest import dependency.

Chart of Oil Imported By India

Chart of Oil Imported By India

Chart of Oil Imported By India

Energy Dependence of India

  • The primary energy consumption in India is the third biggest after China and USA with 5.5 % global share in 2016 with total primary energy consumption from crude oil being 212.7 Mtoe at 29.38 % and natural gas at 45.1 Mtoe accounting for 6.23 % energy.

  • India ranks 81 position in overall energy self-sufficiency at 66 % in 2014.

  • In 2009 - 10, the country imported 159.26 million tonnes of crude oil which amounts to 80 % of its domestic crude oil consumption and 31 % of the country’s total imports are oil imports.

  • By 2030, India’s dependence on energy imports is expected to exceed 53 % of the country’s total energy consumption

Image of Indian Demand Growth

Image of Indian Demand Growth

Image of Indian Demand Growth

Where Does India Get Its Crude?

Some of the countries that supply crude oil to India include -

  • ANGOLA: Nemba, Girassol, Kissanje, Palanca

  • IRAN: Iran Heavy, Iran Light, Iran Mix, Darius

  • IRAQ: Basrah Heavy, Basrah Light, Basrah Medium, Kirkuk, Rumalia

  • KUWAIT: Kuwaity Export

  • MALAYSIA: Kikeh, Kimanis, Labuan, Tapis

  • NIGERIA: Agbami, Quaiboe, Erha, Brass River, Bonny Light, Bonny Medium, Brass Blend, Akpo, Antan, Escalator, Forcados

  • SAUDI ARABIA: Arab Light, Arab Medium, Arab Mix, Arab Extra Light

  • UAE: Murban, Upper Zakum

With US now becoming another supplier for India

What Are the Ways to Reduce India’s Energy Dependence?

  • One of the ways is to use diverse countries for import especially non-middle east and stable counteies.

  • However, best way is to meet demand domestically- an estimated 75 % of India’s sedimentary basins have yet to be adequately explored. Of the 26 known sedimentary basins in the country, only seven are currently producing oil and gas.

  • India has the world’s fifth largest wind power market and also plans to add about 100, 000 MW of solar power capacity by 2020.

  • India envisages increasing the contribution of nuclear power to overall electricity generation capacity from 4.2 % to 9 % within 25 years.

  • The country has five nuclear reactors under construction (third highest in the world) and plans to construct 18 additional nuclear reactors (second highest in the world) by 2025.

Details of the Import from US

  • IOC will process crude at its refineries located at Paradip, Haldia (in West Bengal), Barauni (in Bihar) and Bongaigaon (in Assam).

  • This was one of first shipments to India since United States stopped oil exports in 1975.

  • India now is world’s third-largest oil importer among South Korea, Japan, Thailand, China and Taiwan to buy US crude oil as they seek to diversify oil imports from other regions after the OPEC production cuts raised prices of Middle East heavy-sour crude (grades with a high sulphur content).

  • The delivery followed recent commitments to US oil purchases by Indian state refiners- Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) placed orders for about 2.95 million barrels and 1 million barrels of US crude respectively for their Kochi and Vizag refineries.

  • Indian companies, both public and private, have invested about $5 billion in US shale assets and contracted 5.8 million tonnes per annum of liquefied natural gas (LNG) from US whose first shipment is expected to be delivered to India in January 2018.

India-US Energy Relations

  • The IOC purchase comes after Prime Minister’s visit to the US in June 2017 when President Donald Trump assured of more energy exports to India.

  • Under the renewed energy partnership, India and US are elevating cooperation in field of energy, including in cleaner fossil fuels, renewables, nuclear, and cutting edge storage and energy efficiency technologies.

  • US crude oil shipments have potential to boost bilateral trade between both countries by up to $2 billion.

- Published/Last Modified on: November 27, 2017

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