Indian oil companies sign agreements with global petroleum firms to diversify long-term energy imports

Indian oil companies have signed agreements with overseas petroleum firms to accelerate supply assurances and facilitate hassle-free, long-term imports of energy products such as oil and gas. These aim to help Indian companies diversify their energy imports in the long run and better manage challenges geopolitical conflicts and transportation crises in the Red Sea. India imports a significant amount of crude oil and gas from a limited number of companies in select countries.

India imported 232.5 million tonnes of crude oil in the financial year 2023-24, almost the same as the previous year. The country spent US$132.4 billion on crude oil imports in the financial year 2023-24, a 16 percent decrease from the US$157.5 billion disbursed in the financial year 2022-23. India’s import dependence on crude oil increased marginally to 87.7 percent in the financial year 2023-24, compared to 87.4 percent reported in the previous year. Domestic production of crude oil stood at 29.4 million tonnes in the financial year 2023-24, almost unchanged from the previous year.

OVL inks pact with International Resources Holding
ONGC Videsh, a wholly owned subsidiary and overseas arm of Oil and Natural Gas Corporation Ltd. (ONGC) the National Oil Company of India and a Navaratna Central Public Sector Enterprise, along with Oil India Ltd. (OIL), and Khanij Bidesh India Ltd. (KABIL), signed a Memorandum of Understanding (MoU) on Tuesday with International Resources Holding RSC Ltd. (IRH), United Arab Emirates, to collaborate globally on the Critical Mineral supply chain. The primary goals of this MoU are to identify, acquire, and develop Critical Mineral projects worldwide, including India.

According to company sources the parties aim to leverage their expertise, resources, and networks to pursue mutually beneficial opportunities, achieve operational excellence, and secure a stable supply of critical energy minerals. The MoU outlines a cooperative and coordinated approach, focusing on project identification, joint due diligence, risk management, and developing a long-term offtake strategy. ONGC Videsh Ltd, the flagship NOC of India, is engaged in overseas exploration and production (E&P) operations and is India’s largest international oil and gas E&P company having 32 Assets in 15 countries.

ONGC Videsh’s production of Oil and Oil Equivalent Gas (O+OEG) during financial year 2023-24 was 10.518 million metric tonnes oil equivalent (MMtoe) and is currently producing about 200,000 barrels of O+OEG per day. ONGC Videsh has total oil and gas reserves (2P) of about 476 MMtoe whereas its parent, ONGC has 2P reserves of 704 MMtoe as on April 2024.

Indian Oil signs pact with ADNOC
Government-owned oil refinery Indian Oil Corporation (IOCL) announced the signing of a long-term Heads of Agreement (LNG agreement) with Abu Dhabi National Oil Company (ADNOC) for the delivery of 1 million metric tonnes per annum (mmtpa) of liquefied natural gas (LNG). India’s largest integrated and diversified energy company will source 1 million metric tonnes per annum (mmtpa) of LNG from ADNOC’s lower-carbon Ruwais LNG project, which is currently under development in Al Ruwais Industrial City, Abu Dhabi, and is expected to start commercial operations in 2028. Under the 15-year agreement, LNG cargoes will be shipped to IOCL destination ports in India.

Rashid Khalfan Al Mazrouei, ADNOC Senior Vice President, Marketing, said, “India is an important, strategic partner of the UAE and this agreement underscores ADNOC’s commitment to delivering secure, lower-carbon energy to support the country’s energy security. The agreement also highlights confidence in the Ruwais LNG project, which is an integral part of ADNOC’s strategy to expand our global LNG footprint to meet growing demand today while helping the world transition to a cleaner energy future.”

The agreement further strengthens ADNOC’s position in India’s fast-growing energy market. By 2029, IOCL is expected to become ADNOC’s biggest LNG customer, with a total offtake of 2.2 mmtpa, comprising 1.2 mmtpa from Das Island and 1 mmtpa from Ruwais LNG. This LNG supply agreement highlights the success of the Comprehensive Economic Partnership Agreement (CEPA), signed by the UAE and India in 2022, in strengthening bilateral trade cooperation between the two nations. The agreement with IOCL is one of several long-term LNG sales commitments ADNOC has signed with international partners for Ruwais LNG for over 70% of the project’s total production capacity.

ONGC-TotalEnergies deal
In March this year, India’s leading oil explorer ONGC signed an MoU with French major TotalEnergies for exploration and deep-water blocks. The MoU seeks to provide technical support to ONGC’s push to explore and reduce greenhouse gas emissions in development of deep-water blocks especially in Mahanadi and Andamans, off India’s eastern coast. Sushma Rawat, ONGC’s Director for Exploration, stated, “We will jointly evaluate exploration and development opportunities to create synergies with local economies.”

In 2023, ONGC signed heads of agreement with US oil giant Exxon Mobil Corporation (ExxonMobil) for deep-water exploration on the country’s east and west coast. The tie-up with ExxonMobil focuses on the Krishna Godavari (KG) and Cauvery basins in the eastern offshore region and the Kutch-Mumbai region in the western coast. According to resports, ExxonMobil is also looking for buying stake in some of the local deepwater blocks of ONGC.

India’s pact with Guyana
India’s Ministry of Petroleum and Natural Gas signed a Memorandum of Understanding (MoU) to cushion cooperation in the hydrocarbon sector. The move will India’s strategy to diversify its energy sources amid growing domestic demand. Under the agreement, the two countries will collaborate across the entire hydrocarbon value chain. This include the sourcing of crude oil from Guyana, participation of Indian companies in Guyana’s exploration and production sector, and joint efforts in crude oil refining capacity building, and bilateral trade enhancement.

The MoU came into force early this year and will remain valid for five years, subject to automatic renewal, unless terminated with a three-month advance notice by either party. The move is significant from Indian point of view, being India the world’s third-largest energy consumer. The MoU seeks to meet the escalating energy needs in a rapidly growing economy. Guyana, a recent entrant in the global oil production map, has made substantial oil discoveries, adding to its strategic importance in the energy sector.

Guyana has gained significance in the world oil and gas sector becoming the world’s newest oil producer. The new discoveries of 11.2 billion barrels of oil equivalent, amounts 18 percent of total global oil and gas discoveries and 32 percent of discovered oil. According to OPEC World Oil Outlook 2022, Guyana is projected to see a significant ramp up in production, with liquids supply growing from 0.1 million barrels per day in 2021 to 0.9 million barrels per day in 2027.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com