India and Guyana have announced a new cooperation agreement in the oil and gas sector, with India set to explore purchasing oil from the South American country in a long-term deal. Additionally, India is looking to participate in Guyana’s oil and gas exploration sector. The announcement came after India’s Oil Minister, Hardeep Singh Puri, met with Guyana’s President, Mohamed Irfaan Ali. The two leaders agreed to direct government-to-government cooperation across the entire oil and gas sector.
The agreement between India and Guyana includes increased long-term offtake, participation in exploration and production activities, technical cooperation in the midstream and downstream sectors, and capacity building. The deal could be a significant boost for both countries’ energy sectors.
India is one of the world’s largest energy consumers and has been actively seeking to diversify its energy sources. Guyana, on the other hand, is a relatively new entrant in the global oil and gas market, having only discovered significant reserves in 2015. The country has been eager to attract foreign investment to develop its energy sector.
India’s interest in Guyana’s oil and gas sector is not surprising, given the country’s strong demand for energy and its desire to reduce its reliance on oil imports from the Middle East. Guyana, meanwhile, is eager to attract investment and expertise from more established energy players.
The agreement between India and Guyana is part of a broader trend of countries seeking to strengthen their energy ties. As countries seek to diversify their energy sources and reduce their reliance on politically volatile regions, partnerships between energy producers and consumers are likely to become increasingly common.
The India-Guyana agreement on the oil and gas sector is a positive development for both countries. It could help India diversify its energy sources and reduce its dependence on the Middle East, while also providing Guyana with much-needed investment and expertise to develop its energy sector. The deal is yet another example of the growing importance of energy cooperation in an increasingly interconnected world.
India is heavily reliant on oil imports, with 85 percent of its oil demand being met by imports from around the world. This includes imports from Latin America and the Caribbean region (LAC), which make up nearly 10 percent of India’s oil imports. With increasing energy demand in Asia, crude oil from Latin America is moving towards China and India. LAC, with its surplus crude and investment opportunities, aligns perfectly with India’s energy security strategy.
The crude petroleum oil traded between India and Latin America is crucial to India’s energy security, and the country is looking to access Guyana’s crude oil. During the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC 2022), held in October 2022 in the United Arab Emirates, Guyana’s Minister of Natural Resources and India’s Minister of Petroleum Hardeep Puri discussed areas of cooperation in the energy sector.
The energy-synergy of India: Associations with Colombia, Guyana and Venezuela:
In addition to crude oil, Indian companies are also importing significant volumes of petroleum coke, a by-product of oil upgrading and an alternative to coal, from Venezuela. The low cost of pet coke compared to coal has made it very attractive to Indian companies, despite the downside of long shipping times, with cargoes taking nearly 50 days to arrive in India.
Colombia, a country that generates 60 percent of its energy through hydro-electric means and produces over 1 million barrels of oil per day, is also actively diversifying its sources of energy. It can be a valuable partner for India in the clean energy sector.
In this context, India and Guyana’s recent agreement to cooperate in the oil and gas sector, including long-term crude purchase and investment in the upstream sector, is a significant development. Oil Minister Hardeep Singh Puri’s meeting with Guyana’s President Mohamed Irfaan Ali resulted in direct government-to-government cooperation across the entire spectrum of the oil and gas sector. This includes increased long-term offtake, participation in exploration and production activities in Guyana, technical cooperation in the midstream and downstream sector, and capacity building.
The collaboration between India and Guyana in the oil and gas sector can have a positive impact on both countries’ energy security and economic growth. With India’s significant energy demand and Guyana’s abundant oil and gas resources, this partnership can be a win-win situation for both nations.
