The recent talks between Guyana and India signal potential growth in their energy relationship, but significant challenges remain if a long-term oil deal is struck. Analysts told S&P Global that while India seeks reliable crude supplies to bolster energy security, competition and refinery preferences could complicate negotiations.
India is vying for access to Guyana’s oil reserves, which are projected to reach one million barrels per day (b/d) by 2026. However, European buyers dominate Guyana’s crude exports, and Russian oil, offered at a discount, has captured a significant share of India’s market. Abhishek Ranjan, South Asia oil research lead at Commodity Insights, noted, “Despite production advancements and strengthening of the bilateral relationship, challenges persist for Guyanese crude in the Indian market.”
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S&P Global noted that Indian refineries, optimized for processing sour and heavier crudes, face logistical and technical hurdles in adopting Guyana’s sweeter Liza crude. “For Guyana to secure a long-term crude oil supply contract with India, it will need to offer terms as ‘sweet’ as its crude,” Ranjan said.
The price differential poses another obstacle. On Nov. 21, Liza crude traded at a discount of US$1.80 per barrel to dated Brent, reflecting weakening European demand and competition from other grades. “Indian refiners are surely open to testing out more and more cargoes from Guyana. The logistics have to work. And so does the price,” an Indian refining source told S&P Global.
While India imported trial cargoes of Liza crude in 2021, further trade has stalled. Still, India’s government is pursuing deeper energy ties, highlighted by Prime Minister Narendra Modi’s recent visit to Guyana. An Indian foreign ministry official stated, “We would like to have long-term contracts — government-to-government commitments — that would bring greater predictability in supplies.”
If Guyana offers competitive terms, the deal could benefit both nations. However, with Guyana’s crude now sought globally, India’s ability to secure a consistent supply hinges on strategic pricing and logistical coordination. For the time being though, Guyana has no interest in a long-term crude deal with India. Officials say they prefer the competitive rates Guyana gets from marketing its crude publicly.
