New Delhi: India is tapping the United States to secure marine cover for vessels to ferry oil from the Middle East as it looks for continuity in energy supplies beyond its current stockpile, a top oil ministry official said.
The country has stocks in tanks, pipelines and ships in transit to meet 25 days’ requirement of crude oil — the raw material for making fuels like petrol and diesel — and a similar number of days’ stock of finished fuel.
The widening war in West Asia has disrupted tanker movement through the Strait of Hormuz — the narrow sea lane that carries about one-fifth of the world’s oil and large volumes of liquefied natural gas (LNG).
India imports about 88 per cent of its crude oil and around half of its LNG, with 40-50 per cent of crude oil and 50-60 per cent of LNG shipments routed through the corridor, which is roughly 21 nautical miles wide at its narrowest point, with the shipping lanes even narrower — two 2-mile-wide channels separated by a 2-mile buffer.
“We are in a comfortable position right now,” the official said, adding non-Strait barrels continue to flow and India is tapping suppliers in West Africa, Latin America and the US to supplement any volumes lost.
The official said the oil ministry is in discussions with major producers and traders to secure oil, liquefied petroleum gas (LPG), and liquefied natural gas (LNG).
“We are in touch with US authorities for getting a cover from the International Development Finance Corporation for vessels to transit the Strait of Hormuz,” he said.
US President Donald Trump has ordered the multilateral financial institution to provide political risk insurance and financial guarantees for maritime trade in the region.
But before IDFC is able to do so, a corpus worth hundreds of millions of dollars has to be set up for it to provide the cover, he said, adding the premium for the insurance will ofcourse be paid by parties contracting the cargo.
The official said India is looking at buying oil from all sources, including Russia, to replenish crude stock.
The government is in talks with suppliers, including Sonatrach and Abu Dhabi National Oil Company, as well as global traders such as TotalEnergies, Vitol, and Trafigura, to secure additional oil and gas supplies.
Besides, imports of oil and cooking gas LPG have increased from the United States, he said.
While the oil stock position is comfortable, the closure of the Strait of Hormuz has cut liquefied natural gas (LNG) supplies to India. This has resulted in gas supplies being cut to industries.
The official said that to deal with the situation, the government could reprioritise gas allocation to ensure critical sectors get fuel they need.
India meets roughly half of its 195 million standard cubic metres per day (mmscmd) of natural gas consumption through imports. The disruption of shipping through the Strait of Hormuz and force majeure by India’s largest LNG supplier QatarEnergy, has stopped the availability of about 60 mmscmd of gas.
Oil Minister Hardeep Singh Puri has discussed the evolving oil market situation with the International Energy Agency (IEA) and the Organisation of the Petroleum Exporting Countries (OPEC), the official added.