India, the world’s third largest energy consumer and importer, is looking to diversify its sources of oil imports and the South American nation is one of the countries it is tapping for that…
The signing of a five-year agreement of understanding with Guyana for cooperation in the hydrocarbon sector, including the sourcing of crude oil, was authorized by the Union Cabinet on Friday.
“The proposed MoU covers the complete value chain of the hydrocarbon sector, including sourcing of crude oil from Guyana, participation of Indian companies in exploration and production (E&P) sector of Guyana, (and) cooperation in areas of crude oil refining,” a government statement stated.
Additionally, it addresses developing capacity, bolstering bilateral trade, cooperation in the natural gas industry, cooperation in creating the regulatory framework for the oil and gas industry in Guyana, cooperation in the clean energy sector, which includes biofuels and renewable energy sources like solar energy.
The nation of South America is one of the nations India is reaching out to in order to diversify its sources of oil imports. India is the third-largest energy consumer and importer in the world.
The statement stated that the Memorandum of Understanding (MoU), which has been under discussion for over two years, will have an automatic renewal clause if both countries agree. Its initial term will be five years.
“The MoU on cooperation in the hydrocarbon sector with Guyana will strengthen bilateral trade, foster investment…and help diversify source of crude oil, thus augmenting the energy and supply security of the country,” it stated.
Additionally, it would give Indian businesses the chance to operate in Guyana’s exploration and production (E&P) sector. By collaborating with international oil and gas corporations on upstream projects, they will gain experience and support the ‘Aatmanirbhar Bharat’ vision.
As the newest oil producer in the world, Guyana has been increasingly prominent in the oil and gas industry in recent years. The recent finds, which total 11.2 billion barrels of oil equivalent, account for 32% of discovered oil and 18% of all worldwide oil and gas discoveries.
Guyana’s production is expected to increase significantly, with a forecast increase from 0.1 million barrels per day in 2021 to 0.9 million bpd in 2027, according to OPEC World Oil Outlook 2022.
India is the world’s third-largest energy user, third-largest oil consumer, fourth-largest refiner, and the fastest-growing major country with growing energy needs, according to the BP Statistical Review of World Energy 2022.
India’s energy demand is expected to expand at a pace of approximately 3% year until 2040, according to BP Energy Outlook and the International Energy Agency, while the global rate is expected to grow at a rate of 1%. Furthermore, India is projected to contribute 25–28% of the increase in the world’s energy demand between 2020 and 2040.
“In order to provide additional momentum for guaranteeing citizens’ access to, affordability of, and energy security within the nation, India is concentrating on cultivating new partnerships in the hydrocarbon sector, through the diversification of crude oil sources as well as the acquisition of high-quality foreign assets. This strengthens India’s strategic flexibility and lessens reliance on a particular geographic or economic entity, according to the statement.
The government suggests signing a Memorandum of Understanding (MoU) with Guyana on collaboration in the hydrocarbon sector, noting the importance of Guyana, the resurgence of the bilateral relationship in the hydrocarbon sector, and the multitude of potential areas of cooperation.
