India is facing severe pressure from triple-digit oil prices and a rising import bill which is prompting one of the world’s top three largest oil importers to look beyond traditional exporting regions, such as the Middle East, for term crude sourcing.
According to a report from S&P Global Platts, refiners in India are now eyeing Guyana, Azerbaijan and Gabon to see if some term deals are possible, a move which would help to cut dependence on the volatile spot market.
“Today, nobody is bothering who is buying what from where. We are quite happy to source from as far as we can,” a leading Indian oil ministry source said.
The official added that high crude prices were not in the interests of consuming as well as producing nations. “It will lead to recession and also to fall in demand,” the official said, adding that cuts in existing crude supply would cause inflation rates to shoot up and impact overall demand in the economy.
Even analysts held similar views.
“We believe that 2020 marked the start of a new structural cycle in the industry, which could mean higher average prices for the current decade. But at the same time, investors should also not discount the probability of an energy induced recession which could lead to a cyclical downturn over the next 12 months,” Bernstein Research said in a note.
US oil major ExxonMobil has found nearly 11 billion barrels of oil equivalent resources offshore Guyana since 2015, catapulting the country to number 17 for the largest oil reserves in the world. The company currently has two projects in production with another two under development. By 2027, Guyana’s total output is expected to exceed one million barrels of oil per day.