India-US move ahead on strategic energy partnership
US may collaborate with India on its crude oil reserve programme as part of a strategic energy partnership
The US may collaborate with India on its crude oil reserve programme as part of a strategic energy partnership that covers sectors such as oil and gas, power, renewable energy and coal.
Currently, state-run Abu Dhabi National Oil Company (ADNOC) is the only one to partner with India to shore up its crude reserves and participate in India’s strategic petroleum reserves programme
“We urged our teams to focus on strengthening and modernising our power infrastructure, enhancing energy security through energy trade, strategic petroleum reserve cooperation, and collaboration on research and technology,” said US energy secretary Rick Perry at a joint press conference here after the inaugural meeting of US-India Strategic Energy Partnership.
Perry also pitched US as a preferred energy partner vis-a-vis China or Russia. This comes in the backdrop of a rally in oil prices due to the Organization of the Petroleum Exporting Countries (Opec) and Russia cutting supplies, with India calling for a global consensus on “responsible pricing.” Also, India and China may come together to protect their interests as consumer nations in the backdrop of rising global oil prices.
“The more energy resources are available, the less that resource is going to cost. People would always like to get something cheaper, but the fact is ‘having available’ is the most important from my perspective,” said Perry.
India, the world’s third largest energy consumer, has maintained that it is a price-sensitive customer and will seek reasonable rates as its energy demand grows.
“China or Russia may deliver a fuel source to you. Cheaper? I don’t know that,” Perry said.
“The issue is who do you want to be your long-term friend? Do you want the United States that is committed to a long-term healthy relationship or someone who may have some other interest in mind,” Perry added.
India is sourcing liquified natural gas (LNG) and oil from the US, with Indian firms investing $4 billion in US shale gas assets. Of 22 million tonnes per annum (mtpa) of long-term LNG contracts inked by the Indian firms, 9 mtpa is from the US. Indian firms have also sourced 12 million barrels of crude oil from the US over the last six months.
“Dwelled on India’s advocacy for a responsible and reasonable pricing of crude to balance interests of both producing and consuming nations. Shared my insights on US and India’s role in the global oil scenario,” petroleum minister Dharmendra Pradhan said in a tweet.
India’s worry over crude oil prices stems from its energy needs being primarily met through imports, with the country importing 214 million tonnes of crude oil in 2016-17. Extreme volatility has marked crude oil prices, which hit a record $147 per barrel in July 2009.
“As leading global partners, the United States and India believe that energy cooperation can serve as a centerpiece in the bilateral relationship,” the two countries said in a press statement.
Pradhan added at the press conference that the development of gas infrastructure and gas market is imperative for India.
India has been pushing for a gas-based economy. Gas accounts for around 6.5% of India’s primary energy mix as compared to a global average of 24%, The National Democratic Alliance government plans to increase its share to 15% by 2030. India’s gas demand is expected to be driven by the fertilizer, power, city gas distribution and steel sectors.
Perry added that Westinghouse Electric Co. is emerging out of bankruptcy and is capable of delivering the planned six nuclear reactors to India on time.
“In this regard, the two sides reaffirm their strong commitment to early and full implementation of our civil nuclear partnership, including the Westinghouse civil nuclear project at Kovvada. Cooperation in this area is being pursued through relevant bilateral mechanisms,” the joint statement added.
