India, US Look at Energy to Bridge Trade Gap

NEW DELHI: India and the US on Tuesday zeroed in on energy business as a key means to bridge bilateral trade deficit as government data showed oil and gas shipments worth $6.4 billion emerged as the top import item from America in the nine months of 2019-20 financial year.
Sources told TOI there was convergence of opinion on the issue during the delegation-level talks headed by Prime Minister Narendra Modi and President Donald Trump as an expanded oil and gas trade fits well with the energy doctrines of the two leaders. India’s energy trade wiht he US stood at $7.7 billion last year, accounting for 11% of total two-way trade.

“The leaders today have declared energy as one of the four most important pillars of bilateral strategic engagement. India-US strategic energy partnership has been further energised with more emphasis on technology, innovation and capital infusion,” oil minister Dharmendra Pradhan tweeted. He had in October 2019 told the US-India Strategic Partnership Forum’s annual leadership summit he expected India’s energy trade with the US rising to $10 billion in 2019-20, an increase of 44% over 2018-19.

The sentiment found a reflection in US energy secretary Dan Brouillette’s comment at a business meeting when he said, “In the last two years, we have seen a remarkable offtake in the US oil and gas by India, from 25,000 bpd in 2017 to 250,000 bpd now, a 10-fold increase and we expect it to be better from here.” This prompted Trump to remark that energy trade was “going up very very rapidly. Thank you very much Dan. Really great job.”
Diversification of supply basket is a key ingredient of Modi’s energy security policy as it aims to derisk the country’s oil flow from the volatile geopolitics of West Asia, which remains the lead supplier. Trump’s doctrine of energy dominance aims at providing an outlet for the abundant harvest of the US fracking boom, turning the country into a net exporter three years back.
This makes the US an attractive proposition as a supplier for India, which meets 83% of its oil and almost half of gas needs through imports. Rising US supplies and emergence of Russia as another major exporter, have changed the rules of the oil game by reducing OPEC’s sway on global oil market.
Already, India’s oil and gas imports have attained a distinct American flavour as prolonged period of abundant supplies and tepid demand growth in developed economies shifted global flows in Asia’s favour. The US has emerged as an important supplier of crude for India, shipping over 9 million tonne till December 2019 to mark nearly 88% rise over 2018.
Naturally, the two sides are looking at additional areas of energy trade, exemplified by a letter of co-operation between ExxonMobil’s India affiliate and state-run IndianOil for helping transport further expanding its LNG business initiatives Collaboration to explore ways to accelerate India’s access to cost-effective natural gas and evaluate scalability for future business opportunities. The two had signed an MoU in October 14, 2019.
It was IndianOil that first established the viability of US crude for India by bringing a shipment from the spot market in 2017 as Washington began hardening its stand against Iran — then among India’s top-three oil suppliers. The company currently has term contract for 4.6 million tonne of crude.
But state-run gas utility GAIL pioneered the US energy route for India in 2013, much before any entity looked at America as a source of energy, by siging a 20-year contract for a total of 5.8 million tonne of US LNG. The first shipment under that deal hit the Indian shore in 2017.

Source: ToI

Image Courtesy: Business Today