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As oil price flares up, India steps up non-Opec imports

Non-Opec countries including US, Canada, Russia, Kazakhstan and Sudan rose by 908 thousand metric tonne (TMT) during April-November 2017

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The three state-owned oil marketing companies are reducing dependence on Gulf nations for oil imports by stepping up purchases from countries including US, Russia, Canada.

The move would help them to diversify the supplier base and get a cheaper price.

Crude imports from Organisation of Petroleum Exporting Countries (Opec) dropped to 82.4% of the total imports during April-November 2017 as compared to 87.9% during April-November 2016, according to the latest statistics available with Petroleum Planning & Analysis Cell (PPAC) of the Union petroleum ministry.

On the other hand, non-Opec countries including US, Canada, Russia, Kazakhstan and Sudan rose by 908 thousand metric tonne (TMT) during April-November 2017 over the corresponding period a year ago, the report said.

The development is significant given that oil prices have hit two-year high and are hurting the government's financials as imports account for 70-75% of India's crude oil consumption.

Saudi Arabia, UAE, US and Qatar were the top countries from where 65.2% of total petroleum, oil & lubricants (POL) products were imported during April-November 2017. Liquefied petroleum gas (LPG), on the other hand, was mainly imported from Saudi Arabia, UAE, Qatar and Kuwait during April-November 2017. Petcoke and carbon black feed stock (CBFS) were major components of import from the US and Saudi Arabia.

India, which offers a huge market for the supplying countries, has been diversifying its sourcing countries in recent years to reduce payment of high 'Asian premium' to the Opec countries.

Although in small quantities, the imports by Indian companies from the US began after the govenrments of both the countries agreed to strengthen their relationship in the energy sector.

This is also sending signals to the Opec bloc to reduce prices.

India is expected to be the third-largest consumer economy as its consumption may triple to $4 trillion by 2025, according to a Boston Consulting Group report, and is estimated to surpass the US to become the second-largest economy in terms of purchasing power parity (PPP) by the year 2040, according to a report by PricewaterhouseCoopers.

Meanwhile, among the Opec countries, Saudi Arabia is no longer the largest supplier to India. In a written reply to a question in Lok Sabha, oil and petroleum minister Dharmendra Pradhan said Saudi Arabia supplied 21.9 million tonne (mt) of crude oil during from April-October 2017-18, while Iran supplied 25.8 mt. A report released by Rystad Energy last month claims that with surging oil output, US could ramp up its production to 11 million barrels per day, thereby overtaking rivals like Opec nations and Russia.

BALANCING ACT

  • Non-Opec countries including US, Canada, Russia, Kazakhstan and Sudan rose by 908 thousand metric tonne (TMT) during April-November 2017
     
  • The development is significant given that oil prices have hit two-year high and are hurting the government's financials as imports account for 70-75% of India's crude oil consumption.
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