New Delhi: The Union Cabinet on Friday approved signing of a 5-year memorandum of understanding with Guyana for cooperation in the hydrocarbon sector including sourcing of crude oil.
"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 said.
It also covers capacity building, strengthening bilateral trade, collaboration in the natural gas sector, collaboration in developing regulatory policy framework in the oil and gas sector in Guyana; cooperation in the area of clean energy including biofuels as well as renewables sector including solar energy.
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 MoU, which has been in discussion for more than two years, will be for an initial period of five years, with a provision for automatic renewable if the two countries agree, the statement said.
"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 said.
It will also provide opportunity to Indian companies to participate in E&P sector of Guyana, gaining experience by working with global oil and gas companies in upstream projects, thus fostering the vision of 'Aatmanirbhar Bharat'.
In recent times, Guyana has gained significant salience in the oil and gas sector becoming the world's newest oil producer. The new discoveries of 11.2 billion barrels of oil equivalent, amounts to 18 per cent of total global oil and gas discoveries and 32 per cent of discovered oil.
As per 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 bpd in 2027.
As per BP Statistical Review of World Energy 2022, India is the world's third largest energy consumer, third largest consumer of oil and fourth largest refiner and the fastest-growing major economy with rising energy needs.
BP Energy Outlook and International Energy Agency estimate that India's energy demand would grow at about 3 per cent per annum till 2040, compared to the global rate of 1 per cent. Also, India is likely to account for 25-28 per cent of the global energy demand growth between 2020-2040.
"With a view to giving a further impetus to ensure energy access, availability, affordability to citizen underpinned by energy security of the country, India is focusing on fostering new partnership in the hydrocarbon sector, both through diversification of crude oil sources and through acquiring quality overseas assets. This dilutes dependencies on a single geographical/economic unit and increases India's strategic maneuverability," the statement said.
Noting the significance of Guyana and given the renewed momentum to the bilateral relationship in the hydrocarbon sector, and the number of possible areas of cooperation, the government proposes to enter into an MoU with Guyana on cooperation in the hydrocarbon sector, it added.