The March 2021 first shipment of crude oil from Guyana to a refining destination in India has triggered energetic speculation in the sector that, going forward, the global oil refining giant is positioning itself to become one of the country’s major long-term markets.
India’s securing of a 1 million-barrel cargo of Guyana’s Liza light sweet crude which arrived there on April 2 reportedly came against the backdrop of urging by the authorities there that its refiners accelerate the diversification of imports in order to reduce the country’s dependence on crudes from the Middle East in the wake of production cuts by the Organization of Petroleum Exporting Countries (OPEC) that were expected to last through April this year.
While the authorities here have made no comment on the likelihood of India becoming a key long-term market for Guyana’s oil, such a development is unlikely to come as a surprise to watchers who are aware of the ties between the two countries. Relations between the two countries go back to 1966 when Guyana attained its independence and have been sustained through technical support provided by India for projects in Guyana as well as through international fora which, over the years, have included the United Nations and the Non Aligned Movement.
The delivery of the one million barrel consignment to India came in the wake of what, reportedly, was a sharp cut in India’s oil imports from OPEC countries between April 2020 and January 2021, at which point, oil industry sources say, India commenced making preparations to import Guyana crude. Late last week an oilprice.com story labeled the April arrival of the Guyana crude consignment in India as “one of the main buzz stories of the crude market.” What it described as India’s recent oil demand-related travails, seems, it says, “to be giving traction to a new partnership,” with Guyana, “one that perhaps would aid the country in its quest of decreasing its massive oil imports bill.”
According to the oilprice.com report, while its “remoteness from India” may well have caused Guyana to be seen as “one of the least viable alternatives to supply crude, below the surface, there are many reasons indicating that India’s Guyana deal indeed would come to fruition.” The report notes that not only does India need new supply sources to meet its voracious oil demand but also that “the Guyanese government needs a reliable and long-term partner for its own equity, having so far failed to find a marketer for its crude.” Guyana/India relations go back more than fifty years earlier to the establishment of diplomatic ties between the two countries in May 1966, upon Guyana becoming an independent nation and the subsequent close ties between the two countries on the global stage, at the level of both the Non Aligned Movement and the United Nations.
India, the oilprice.com account says, would welcome the opportunity of marketing the Government of Guyana’s crude entitlement deriving from the ongoing oil recovery exercise at the Liza-1 well which commenced production in December 2019.
