India, the third-largest oil importer globally, is aiming to enhance its energy security by sourcing a majority of Guyana’s oil share from its oilfields through long-term agreements at preferential rates, according to two insiders who spoke to Mint.
Exxon Mobil is the top oil producer in Guyana and aims to increase production capacity to 1.2 million barrels per day by 2027.
As the government owns an 11 per cent share, India plans to purchase most of it via preferential long-term contracts to ensure consistent supply from one of the significant oil discoveries of recent times.
India is interested in using oil from South America to meet its energy needs. With a consumption rate of 5 million barrels per day, the country sees the potential of the region’s oil fields.
To assess the feasibility of refining oil from Guyana, Indian Oil Corporation Limited, the largest refiner, conducted a trial run. In July 2021, this effort saw the purchase of its first crude oil cargo from Guyana.
An Indian government official, who preferred to remain anonymous, told Mint that they could acquire the entire share in Guyana since there is limited domestic demand.
They are requesting preferential rates, but the decision ultimately rests on commercial negotiations. The official also mentioned that they have requested long-term contracts during the talks.
To meet its surging energy needs, India is capitalising on its historical links with Guyana, which hosts the largest Indian population of about 40 per cent in the Caribbean.
The President of the South American nation, Mohamed Irfaan Ali, and its Vice President, Bharrat Jagdeo, paid a visit to India recently, where they deliberated upon multiple facets of collaboration, including the oil and gas sector.
India, in efforts to mitigate risk, is looking to diversify its oil supplies and secure long-term contracts. The country is negotiating a deal with Namibia for a long-term supply of crude oil and has already signed long-term contracts with Petrobras in Brazil and Ecopetrol in Colombia.
India aims to supplement current major oil suppliers like Iraq, Russia, Saudi Arabia, the United Arab Emirates, and the United States, by sourcing oil from new suppliers like Colombia, Brazil, Libya, Gabon, and Equatorial Guinea.