“Crude oil reserves would not last for long.” Suggest alternate source of energy for India in light of the given statement.
Answers
Explanation:
New Delhi: India is trying to leverage its robust ties with West Asian crude oil producers such as Saudi Arabia, Kuwait and the United Arab Emirates (UAE) to source additional volumes at terms similar to those of its annual contracts in a bid to avert any sharp rise in its domestic oil prices.
India, the world’s third-largest oil importer, is in discussions with oil producers in West Asia as well as in other geographies to procure a total of about 15 million tonnes of extra crude over the year to urgently bridge a supply gap that will be caused by the exit of Iran from its energy basket.
US secretary of state Mike Pompeo on Monday announced that the Donald Trump administration would no longer grant exemptions to some countries to import Iran oil with the conditional waiver set to expire on 2 May.
India’s attempt to boost crude supplies from the Gulf nations also comes at a time when they plan to increase their investments in India.
Crude purchased under the annual contract terms would be more lucrative for India than under spot contracts. Such contracts would also allow for purchasing additional quantities of crude at similar terms.
“Talks with West Asian suppliers such as Saudi Arabia, United Arab Emirates and Kuwait are in advanced stages. They have been our long-term suppliers and will be leaned on for extra cargoes at old terms and conditions," an Indian government official said, requesting anonymity.
An increase in oil prices is likely to put pressure on India’s fiscal and current account deficits, and comes against the backdrop of the 2019 Lok Sabha elections, where Prime Minister Narendra Modi is seeking a second term.
India is a major importer of Iran oil and imported 23.5 million tonnes in 2018-19 from the country. “There will be no impact of sanctions on the supply side. Our oil companies have the provision to get more cargoes than contracted for from their suppliers," said the government official cited earlier.
India is one of the top consumers of the Organization of the Petroleum Exporting Countries (Opec) that accounts for about 40% of the global output. Saudi Arabia is a prominent member of the grouping.“The Iranian contracts were favourable in terms of them being free on board (FOB) basis, 60-day credit and free insurance. The April supplies were being done on March’s contract terms basis," the government official said. “The contracts with Iran got over in March. The new contracts could not be signed because of technical reasons and the discussions were on for quantity, price and terms when this US announcement came."
The US had granted exemptions to China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey “to ensure a well-supplied oil market" in November last year for six months after it reimposed sanctions on Iran.
“There will be additional supplies from other major oil producing countries. Indian refineries are fully prepared to meet the national demand for petrol, diesel and other petroleum products," India’s oil minister Dharmendra Pradhan said in a tweet on Tuesday.