February 21, 2024

India to keep diversifying oil supply, accelerate energy transition: Oil Minister

Supply cuts by OPEC+, costly shipments from some traditional Middle East suppliers and geopolitical tension is driving India, the world’s third biggest oil importer, to diversify its crude sources and accelerate its energy transition, its Oil Minister Hardeep Singh Puri said.

“Whenever there is vulnerability and uncertainty in the market, the transition gets accelerated. No-one is looking at that”, Puri told Reuters in an interview at this week’s World Economic Forum in the Swiss ski resort of Davos, referring to attacks by the Houthis on ships in the Red Sea.

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Puri said that while OPEC+ nations have a right to decide on their energy production, supply cuts against such uncertainty, and the resulting adverse impact on global prices, will dent long term demand.

It is “imperative” for India to accelerate its transition to green energy in this scenario, he added.

Iraq followed Saudi Arabia in charging a premium for oil supplies to Asian markets which made their crude “more expensive than crude sourced elsewhere”, the minister said, noting India is now buying from 37 countries up from 29 earlier.

Saudi Aramco, the national oil giant, this month cut the price of its flagship Arab Light crude to Asian customers to the lowest level in 27 months.

“I didn’t tell them to reduce it but they did it because they also wanted to. If you look at the Indian figures in the last 2-4 years, some of the major suppliers suddenly became number three and somebody who had only 0.2% (import share) went up,” Puri added.

Iraq replaced Saudi Arabia as the top oil supplier to India a few years ago and now cheaper supply from Russia in the aftermath of Western sanctions for its invasion of Ukraine has pushed it to the top spot followed by Iraq and Saudi Arabia.

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While concerned over the disruptions in the Red Sea, Puri said he was “cautiously optimistic” that they will be resolved.

Puri said he had just signed a memorandum of understanding with Guyana to cooperate across the entire energy value chain of the South American country.

He is also talking to companies in Davos who are interested in making investments in India and with whom he would like Indian oil companies to partner with to explore acquisitions and assets in regions such as Latin America.

Puri said countries, including in the Middle East, had told him they want to acquire Indian oil companies outright, he said, but they are strategic and not for sale.