India and Guyana Forge 5-Year Pact For Crude Oil
India is set to sign a 5-year agreement with Guyana for collaboration in the hydrocarbon sector, particularly in the procurement of crude oil.
The Union Cabinet has given its consent for the signing of a 5-year memorandum of understanding (MoU) with Guyana to foster collaboration in the hydrocarbon sector, specifically concerning the acquisition of crude oil.
India and Guyana 5-Year MoU For Crude Oil
The proposed MoU encompasses all aspects of the hydrocarbon industry, from procuring crude oil from Guyana to facilitating the involvement of Indian companies in Guyana’s exploration and production (E&P) field, as well as promoting cooperation in crude oil refining.
This decision was articulated in an official statement released by the Government.
“The memorandum of understanding (MoU) between India and Guyana has various aspects such as capacity building, enhancement of bilateral trade, collaboration in the natural gas sector, development of regulatory policies for oil and gas, and cooperation in clean energy including biofuels and solar energy.”
India, being the world’s 3rd largest consumer and importer of energy, is keen on diversifying its sources of oil imports, and Guyana is one of the nations it is exploring for fulfilling this objective.
After more than 2 years of discussions, the MoU will have an initial duration of 5 years, with the possibility of automatic renewal if agreed upon by both countries, as stated in the official statement.
HighLights
- This mutual agreement will offer Indian companies the opportunity to engage in Guyana’s exploration and production (E&P) sector, enabling them to gain valuable experience through partnerships with international oil and gas companies in upstream projects.
- This aligns with the vision of ‘Aatmanirbhar Bharat’ (self-reliant India), promoting self-sufficiency in various sectors.
Guyana has emerged as a significant player in the oil and gas industry, becoming the world’s newest oil producer. - The recent discovery of 11.2 billion barrels of oil equivalent represents 18% of total global oil and gas discoveries and 32% of discovered oil, underscoring Guyana’s growing importance in the sector.
According to the OPEC World Oil Outlook 2022, Guyana is expected to experience a significant increase in production. The supply of liquids is projected to rise from 0.1 million barrels per day in 2021 to 0.9 million bpd by 2027.
As outlined in the BP Statistical Review of World Energy 2022, India holds the position of the world’s 3rd largest energy consumer, 3rd largest consumer of oil, and 4th largest refiner.
Moreover, it is recognized as the fastest-growing major economy with a growing demand for energy.
Based on the assessments conducted by the BP Energy Outlook and the International Energy Agency, it is estimated that India’s energy demand will exhibit an annual growth rate of approximately 3 percent until 2040.
This is in contrast to the global growth rate of 1 percent.
Additionally, India is projected to account for 25-28 percent of the global energy demand growth between 2020 and 2040.
To enhance energy access, availability, and affordability for its citizens and ensure energy security, India is concentrating on establishing new partnerships in the hydrocarbon sector.
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This involves diversifying crude oil sources and acquiring high-quality overseas assets.
This approach reduces dependence on a single geographical or economic unit and enhances India’s strategic maneuverability, as stated in the statement.
Recognizing the significance of Guyana and the growing momentum in the bilateral relationship in the hydrocarbon sector, as well as the numerous areas of potential cooperation, the government intends to initiate a Memorandum of Understanding (MoU) with Guyana for collaboration in the hydrocarbon sector, the statement added.
