Singapore—The stellar rise of the US from supplying its maiden crude cargo to India to becoming the second-largest supplier in three years is a sign that New Delhi has an aggressive diversification strategy in place that provides flexibility in sourcing cargoes from a world awash with oil, Petroleum Minister Dharmendra Pradhan told S&P Global Platts.
Pradhan, who is India's longest-serving petroleum minister, said that in addition to oil, the rising availability of alternative forms of energy means buyers are now spoilt for choice when it comes to sourcing energy supplies, reducing the need to solely lean on only a handful of suppliers."The United States of America is neither in OPEC nor in OPEC+. With the US moving to the position of the second-largest supplier of India, it is an indication of free and competitive markets today," Pradhan said in an exclusive interview.
"OPEC countries are dependable suppliers to India and are our good friends. But OPEC should realize the present scenario. We expect producing countries to realize that at one point of time there were no options. But now we have plenty of options," Pradhan added.
India imported 12.69 million mt of US crude in 2020, up nearly 29% from a year earlier, as the country moved from the sixth-largest crude supplier the year before to the fifth-largest last year, data from GAC Shipping (India) Private Ltd. showed.
But in February, crude flows from the US totaled 2.11 million mt, about 31% higher than the 1.61 million mt from Saudi Arabia, putting the US as the No. 2 importer during the month, trailing only top importer Iraq, who shipped 2.89 million mt of crude.
While the surprise twist in February buying patterns stemmed partly from an evolving demand trend, analysts said it also signals New Delhi's objection to the OPEC+ production cuts, which have prompted India to diversify imports. After the production cuts, oil prices rebounded to pre-pandemic levels of around $70 a barrel.
"The recent prices are pinching us a bit but we have to sail through the tide," Pradhan said. "Oil producers should realize that we as leading consumers are guarantors of their domestic production. If you push a consuming country to the wall, it will move to alternative sources."
Pradhan has been serving as the petroleum minister since 2014 and has spearheaded a series of energy policy reforms -- from accelerating the use of LPG as a cooking fuel to aligning domestic oil prices with the global market, while introducing a new hydrocarbons exploration and licensing policy. He is also India's steel minister.
Refining growth, petrochemicalsPradhan said that New Delhi was keeping an eye on geopolitical developments in the Middle East following recent attacks on oil infrastructure in Saudi Arabia, as well as developments on US-Iran relations.
He added that while oil and gas would continue to play a key role in the coming decades, New Delhi would be looking to formulate policies and incentives to ensure that incremental demand is met through relatively cleaner forms of energy.
Pradhan added that with India's oil demand expected to double by 2040, it was imperative for the county to pursue both greenfield and brownfield refinery expansions, which would take the country's refining capacity from the current 250 million mt/year to 450 million mt/year by 2030.
"A lot of the expansion will be done keeping the prospect of the petrochemicals industry in mind. Petrochemicals is a sunrise industry for us and our consumption is much below the global average. We see huge prospects in areas such as polymers and textiles," Pradhan added.
He said that consumption of gasoline and gasoil had rebounded to pre-pandemic levels, while the LPG distribution initiative had helped the product to witness robust growth even during the peak COVID-19 spread last year. "In some regions, demand for transport fuels is even above pre-pandemic levels."
Energy transition pathCommenting on the government's vision to achieve the target to raise the share of gas in the energy mix to 15% by 2030 from the current 6.2%, Pradhan said New Delhi was pushing different pathways, such as coal gasification and biogas.
In the recent federal budget, India unveiled a national hydrogen mission to accelerate plans on the carbon-free fuel.
"We have a vision to become a key player in hydrogen as we have now become in solar energy. We have drastically reduced production costs for solar power and we want to do the same for hydrogen. For that we need new technologies for which we are working with various stakeholders and experts," Pradhan added.
Indian Oil Corp. and Greenstat Norway have recently agreed to set up of Centre of Excellence on Hydrogen, which would facilitate transfer and sharing of technology, know-how and experience through the green hydrogen value chain and other relevant technologies including hydrogen storage and fuel cells.
"We are also aiming for aluminum air batteries, which will be made from domestically available aluminum," Pradhan said.
The aluminum–air battery is considered to be an alternative power source for electric vehicles (EVs) because of its high energy density. They produce electricity from the reaction of oxygen in the air with aluminum.
Indian Oil has also recently entered into a collaboration with Phinergy of Israel to manufacture aluminum-air systems in India, as well as develop fuel cells and indigenous hydrogen storage solutions.
