The US has emerged as an important energy supplier for India, with total crude oil and liquefied natural gas (LNG) imports worth an estimated $6.7 billion, officials said. Imports of the two commodities in April-December 2019 have already surpassed the shipments during the entire previous fiscal year.
Chart Energy & Chemicals Inc — a US company specialising in the supply chain of liquefied gas — will also be a part of the “letter of cooperation” along with ExxonMobil India LNG Ltd and state-run Indian Oil Corp, coinciding with US President Donald Trump’s visit to India. “By linking our global expertise with other leading players, we can create strong and reliable pathways for gas to move quickly and efficiently to where it is needed,” Alex Volkov, chairman, ExxonMobil LNG Market Development Inc said in a statement.
The partners hope to make “virtual pipelines” to fuel factories, households and vehicles in cities not connected to the gas grid.
The agreement is expected to help India achieve its target of raising the share of gas in the energy basket to 15% in 10 years, from 6.2% now. This is still lower than the global average of 24%, but the clean fuel has been rapidly adopted by industries and households where supply is available, as in Gujarat, where gas accounts for 26% of the energy consumed.
Government officials said growing energy ties with the US help the country reduce its dependence on the volatile Middle East region, which supplies the bulk of India’s LNG and crude oil requirements. India imports about 80% of the crude oil it processes, while domestic production has declined gradually over the years in the absence of significant new discoveries.
India has started importing LNG and crude oil from the US only in the past 2-3 years, but trade has increased significantly.
Purchase of LNG from the US by Indian companies rose from $155 million in FY17 to $527 million FY19. In the first nine months of FY20, inbound shipments have already soared to $576 million.
Similarly, imports of crude oil from the US began modestly in FY18 with $609 million of purchases. This jumped to $3.6 billion in FY19. In the first three quarters of the current fiscal, crude oil imports have already touched $3.7 billion.
IOC finalised a term contract in February last year to buy American crude, making the country a major source of energy for India and becoming the first Indian state-run company to sign such a deal with the US.
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