New Delhi: The share of Middle East crude in India's crude oil import basket has dropped from 69.2 percent in FY20 to 63.49 percent in FY21 due to the production cuts announced by Organisation of Petroleum Exporting Countries (OPEC) since May 2020, Minister for Petroleum and Natural Gas Hardeep Singh Puri told the Lok Sabha on Monday. In FY20, the total crude oil import from Middle East countries stood at 88.9 Million Metric Tonne (MMT) out of total import of 128.8 MMT. The figure fell to 69.9 MMT out of total import of 110.1 MM in FY21, the minister told the Lower House of Parliament.
In a written response to a question on India's decision to diversify sources of crude oil, Puri said, "During FY 2019-20, before Organisation of Petroleum Exporting Countries (OPEC) imposed a cut, import of crude oil by Oil PSUs from Middle East Countries was 69.02% (88.9 Million Metric Tonne (MMT) out of total import of 128.8 MMT) but during FY 2020-21, import of crude oil from Middle East reduced to 63.49% (69.9 MMT out of total import of 110.1 MMT)."
Explaining the rationale behind the reduction in import of crude oil from the Middle East, Puri said, "This reduction in import of crude from Middle East is mainly on account of crude oil production cut by OPEC since May 2020, as countries which are members of OPEC, produce and export crude oil to buyer countries as per their agreed modified quota of OPEC plus."
"To ensure security of crude supplies and to mitigate the risk of dependence on crude from single region, Oil Public Sector Undertakings (PSUs) procure crude from countries located at various geographical locations viz, Middle East, Africa, North America, South America, etc," said Puri.
While stating that oil PSUs are now sourcing crude oil from Guyana and the United States (US), the minister listed a few contracts that have been signed by Indian Oil Corporation (IOC) with these countries. "IOCL has also bought its first crude oil cargo from Guyana in July 2021 and entered into a term contract with USA for optional purchase of US grade crude oil. Indian Oil Corporation Limited (IOCL) has signed a term contract with Rosneft, National Oil Company of Russia, to source Urals grade crude," said Puri.
The Centre asked oil PSUs to diversify sources of crude oil as a rebuttal to the Organisation of Petroleum Exporting Countries (OPEC) after OPEC refused to yield to India's requests to ease production cuts earlier in March this year to cool off global crude oil prices. The rise in prices of crude, coupled with the high taxes levied by the Centre and state governments on fuel, have pushed the prices of petrol and diesel to record highs in the country. This has caused significant inflationary pressure on the economy. The face-off with OPEC prompted the Centre to diversify its crude oil import sources in order to reduce the country's dependence on the Middle East region for securing its energy needs.
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