Tehran lost its position as second largest crude supplier to New Delhi after import cuts
Amid growing international pressure on Iran, India has started looking at other Gulf nations to meet its crude oil requirements. India has approached Saudi Arabia, Qatar and Kuwait to meet the shortfall as crude supplies from Iran is likely to fall further in view of U.S. and European economic sanctions on Iran, besides augmenting gas supplies to meet India's growing energy requirements.
Significantly, Iran has lost its position as the second largest crude supplier to India after import cuts. Iran is now the fourth largest supplier, after Saudi Arabia, Kuwait and Iraq, as imports from the Islamic Republic has come down from 18.5 million tonnes in 2010-11 to 17.44 million tonnes in 2011-12. Under diplomatic pressure, India is likely to further cut imports to 15.5 million tonnes this fiscal.
India has asked Saudi Arabia, its largest supplier of crude oil and LPG, for 5 more million tonnes of crude to make up for the drop in imports from Iran. Petroleum and Natural Gas Minister S. Jaipal Reddy, who attended the OPEC Ministerial Conference in Vienna (Austria) recently, met Saudi Oil Minister Ali al-Naimi to increase the import from the existing 32 million tonnes it had imported during 2011-12. On the issue of SA Aramco and other companies investing in India's petrochemical and downstream sector, Mr. Naimi said this would be favourably examined.
Mr. Reddy also met Iranian Oil Minister Rostam Ghasemi and sought more time for ONGC Videsh Ltd. to develop the offshore South Pars Phase-12 gas fields. Iran has assured India that all pending issues would be resolved at an early date, a senior Petroleum Ministry official said.
The Minister discussed sourcing of more LNG and oil from Qatar during his meeting with his Qatari counterpart, Mohammed Bin Salah Al Sada. During 2011-12, India imported 6.41 million tonnes of oil from Qatar. “India and Qatar discussed long-term LNG contract between Petronet LNG Ltd and RasGas [of Qatar] for another 3.5 million tonnes of LNG, including the need to settle the pricing issue at an early date,” the official said. Petronet currently imports 7.5 million tonnes of LNG from Qatar on a long-term contract.
During his talks with Algerian Minister for Energy and Mines Youcef Yousfi, Mr. Reddy sought additional quantities of crude oil and LNG supplies. “GAIL is already in talks with Sonatrach [Algerian national oil company] for tying up LNG imports on an annual basis… India is keen on having long term LNG contracts with Algeria,” the official added.
Notably, between 2010-11 and 2011-12, India's annual average cost of imported crude oil has increased by $27 per barrel, making India's oil import bill rise from $100 billion to $140 billion, a whopping 40 per cent increase. It is estimated that a sustained $10 increase in oil prices lead to a 1.5 per cent reduction in the GDP of developing countries.