The tanker, carrying 1 million barrels of Guyana Liza light sweet crude will dock at the port of Mundra, connected by pipeline to two oil refineries in the country’s north – in Panipat and Bathinda, with an annual refining capacity of 15 million tonnes and 11.3 million tonnes respectively.
Indian regulators have urged state-run refineries to “aggressively” take action to diversify their imports, Reuters reported in the past month. The aim is to reduce dependence on countries in the Gulf which accounted for 60 % of supplies to India in 2019, according to the BP Statistical Review of World Energy.
“We cannot be held hostage to the arbitrary decision of Middle East producers,” a government source told Reuters.
U.S. sanctions against Iran and Venezuela may well have prompted such a position, narrowing the choices of potential alternatives available to importers. Whereas in June 2018, the two countries exported by sea a combined total of 3.5 million bpd, in December 2019, that figure was down to 1.1 million bpd and was further reduced to 0.3 million bpd by December 2020, according to data from Refinitiv.
Rushing in to fill the gap left by the two countries were not only Gulf states, but also leading African producers Nigeria and Angola, whose sea exports in December 2020 stood at a combined 2.9 million bpd.
“As India seeks to further diversify sourcing of crude oil and LNG, Africa has a central role – largely due to its proximity and absence of any choke points in trans-shipments,” Reuters quoted Indian Oil Minister Dharmendra Pradhan as telling an industry summit last month.
But a slowdown in developing African greenfield projects could throw up an impediment.
Kenya’s South Lokichar project serves as an example. A final investment decision was to have been made in 2019 by the Irish company Tullow Oil, with the start of production planned for 2021-2022. But less than six months ago, the dates for investment and initial production were pushed back to 2022 and 2024.
The Australian company Woodside also announced a short delay as operator for another African project, Sangomar, in Senegal, where production in 2023 was supposed to total 100,000 bpd.
For the purposes of comparison, in Guyana on the Stabroek bloc, production last December already reached 120,000 bpd, to be expanded in 2024-2025 to 500,000 bpd thanks to the introduction of new vessels for floating production storage and offloading (FPSO). Exxon Mobil is already using one unit in operating on the block.
In the next few years diversification of Indian imports is likely to be achieved through U.S. oil. Shipments of U.S. oil to India rose by more than 80 % from 2018-2020 — from 151,000 bpd to 277,000 bpd, according to data from the U.S. Energy Information Administration.