India gets first crude oil cargo from US in 42 years

India got its first shipment of crude oil from America in 42 years on Monday, at Paradip port in Odisha. 

This follows the recent commitment on US oil purchases by Indian Oil Corporation (IOC) and Bharat Petroleum (BPC).  Together, said IOC, they’d placed orders for over two million barrels from the US, “with the potential to boost bilateral trade by up to $2 billion”.  

MT New Prosperity, a very large crude carrier, of capacity two million barrels of crude, that left US Gulf Coast on August 19, arrived at Paradip port on Monday. IOC will process the crude at its east-coast base refineries located at Paradip, Haldia, Barauni and Bongaigaon.

IOC, which became the first Indian public sector refiner from India to source US crude, has placed a cumulative order 3.9 million barrels from the US. 

Hindustan Petroleum and BPC, India’s two other public sector refiners, have also placed orders for about one million and 2.95 million barrels, respectively, for their Vizag and Kochi refineries from the US. The total volume of the crude presently contracted by Indian public sector refineries is 7.85 million barrels. 

The three refiners are sourcing sweet, sour and heavy crudes for their refineries, which are equipped to handle complex mix of crude oils.

Indian companies, both public and private, have made sizeable investments in US shale assets, with a total investment of approximate $5 billion. The domestic companies have also contracted for sourcing liquefied natural gas from the US and the first shipment is expected to be delivered to India in January 2018.

MaryKay Carlson, chargé d’affaires at the US embassy in New Delhi, said: “The US and India are elevating our cooperation in the field of energy, including plans for cleaner fossil fuels, renewables, nuclear and cutting-edge storage and energy-efficiency technologies.  We look forward to working together on further sales of US crude and exploring opportunities to expand the role of natural gas in India.”

The shipment was met by US Consul General to Hyderabad, Katherine Hadda; Joint Secretary for International Cooperation from the Ministry for  Petroleum and Natural Gas, Sunjay Sudhir; and Joint Secretary, Americas Division, from the Ministry of External Affairs, Munu Mahawar.

“Energy and energy security are pillars of any strong economy.  The US looks forward to expanding our cooperation with India in this area. In my consular district of Odisha, Andhra Pradesh, and Telangana, our partnerships with various stakeholders on clean energy projects will continue to strengthen,” stated Consul General Hadda.

During their June 26 meeting in Washington, US President Donald Trump and Prime Minister Narendra Modi had committed to expanding and elevating bilateral energy cooperation through a strategic energy partnership. The leaders called for a rational approach that balances environment and climate policy, global economic development, and energy security needs. Trump affirmed that the US continues to remove barriers to energy development and investment in the US and to US energy exports, so that more natural gas, clean coal, and renewable resources and technologies are available to fuel India’s economic growth and inclusive development.

“The sourcing of the crude from the US is, therefore, a step towards strengthening of India-US bilateral relations in the hydrocarbon sector. The US and India are the world’s largest and third largest consumers of energy respectively. Rich in hydrocarbon assets, the US can be a significant supplier for Indian demand,” read an official statement.