KOLKATA (miningweekly.com) – In the wake of the end of sanction waivers by the Trump administration for imports of Iranian crude oil, India’s Petroleum and Natural Gas Ministry has officially issued assurances to all domestic refineries that the government will ensure adequate supplies.
“The government has put in place a robust plan to ensure adequate supplies of crude oil to oil refineries from May onwards. There will be additional supplies from other major oil producing countries from different parts of the world,” the official statement issued by the Petroleum and Natural Gas Ministry said.
“The refineries are fully prepared to meet the national demand for petrol, diesel and other petroleum products,” the Ministry said.
The reassurance of supplies of crude to refineries and dispelling fears of a shortage of end products is significant coming as it does in the midst of India’s national elections, pre-empting it from becoming a political issue.
Interestingly, the opposition Congress party has already attacked the government for not standing up to the Trump administration’s threats of sanctions against India in the case that it persists with Iranian crude oil imports, with the opposition party claiming that it was India’s sovereign right to decide on the source of its imports and that US sanctions against Iran are unilateral and were not passed by the United Nations.
Indian government officials point to the White House statement which said, “The US, Saudi Arabia and UAE, three of the world’s largest energy producers, along with our friends and allies are committed to ensuring that global oil markets remain adequately supplied. We have agreed to take timely action to assure that global demand is met as all Iranian oil is removed from the market.” This, government officials are taking as a signal that the US will take into consideration India’s crude oil import dependency.
“The Indian government will continue to work with its partner nations, including the US, to find all possible ways to protect India’s energy and economic security interests,” the Ministry said.
However, one of the biggest sticking points in finding alternative crude oil import sources for India will be finding the matching concessional terms that are available for imports from Iran, the country’s third largest source for crude oil till now.
For example, Iranian crude imports to India are contracted with 60-day credit terms, free freight insurance and some volumes are even transacted in Indian rupees and not US dollars.
Sources in the Indian government said that talks between India and the US are under way and initial indications are that part of the shortfall of India’s import volumes could be met on concessional terms by the US.
The US has reportedly offered to supply crude oil and natural gas on short term contracts to partially offset the volume of imports from Iran that will come to a halt next month so India does not fall into a shortage crisis following the end of the sanctions waiver by the US.
However, Indian officials are still waiting for formalisation of terms and conditions of such trade and have yet to be assured that the ‘concessional terms’ put on the table match the terms enjoyed by India for crude oil trade with Iran.