India has expressed interest in locking in an agreement for purchasing at least two million barrels of crude oil at a time but Guyana has maintained its position that it is not yet ready for a fixed agreement and will focus on the MoU signed yesterday that focuses on other opportunities.
“They made several requests to purchase crude through a bilateral agreement, more like a long-term arrangement, but the request is also to do a lift of 2m barrels when the time comes. Right now our hard logistics is accommodating 1m barrels per lift so they require if we get any agreement which we haven’t gotten to…,” Minister of Natural Resources Vick-ram Bharrat explained, following the announcement of the signing yesterday of a MoU on energy.
He said that from the first time the idea was floated by New Delhi, it “has always been” George-town’s position of caution of entering into a fixed arrangement. “It has always been our position, that is still our position, nothing has changed. I won’t say any decision was made but it is still our position,” he said.
Jaideep Mazumdar, Secretary to India’s Minis-ter of External Affairs Dr. Subrahmanyam Jaishankar yesterday told Stabroek News that his country was not disappointed that it didn’t secure an exclusive purchase agreement because the opportunities here in many other areas abound.
“… the hydrocarbon agreement is an umbrella agreement, it covers many aspects from prospecting and exploration, down to setting up cooperation for setting up downstream projects like (a) petroleum refinery project, etcetera and also capacity building of people from Guyana in these. This is a government-to-government MoU,” He said while the interest was made known, it is “for Guyana to decide on how it will proceed” but securing a locked in guarantee would do well for energy security.
“…There are so many prospects of cooperation that we don’t express any disappointment. The future is so open we have so many prospects for cooperation in these areas…,” he added.
Clinching an exclusive purchase agreement, the Secretary explained has many benefits for India. “(The) advantage is greater predictability even in the offtake of crude. We need large quantities and if we were to know well in advance if the quantities are available the contracts will be much easier. Also, the transport is another aspect because we are a very long way away so the use of VLCC (Very Large Crude Carriers) would be more predictable,” he said.
This underscored Prime Minister Narendra Modi’s position when during opening remarks at the Guyana-India bilateral yesterday at State House he said that Georgetown will play a role in his country’s energy sector.
“Given the new possibilities in the area of energy, we will move forward together as natural partners. Guyana will play an important (role) in India’s energy security. In this regard, we will create a roadmap for a long-term partnership. The MoU that we are signing today on this subject will further strengthen our cooperation,” he said.
For both the private sector and government in India, he said that decisions depend on what this country offers.
Conversation
“Definitely depends on what is on offer from the Guyanese side so I am sure the oil companies from India will be in conversation. They are both private as well as public sector oil companies in India that will be interested in participating in the hydrocarbon sector,” he said.
The hydrocarbon MoU stated that it “establishes a framework for Guyana and India to enhance bilateral collaboration in the hydrocarbon sector. It encompasses investment promotion, technology transfer, joint studies, and capacity building across the entire hydrocarbon value chain. This agreement underscores a shared commitment to fostering energy security and advancing mutual development priorities.”
Guyana’s Minister of Natural Resources said that apart from the MoU, “we have been engaging them already on sharing of information, technical assistance, we have been getting a lot of technical assistance from them, especially through the Indian oil companies.“
“The cooperation has already been started. They are looking at other areas too. Fertilizer is one area they signaled some interest in as well. They would have looked at the Wales pipeline the gas-to-energy project excess gas. See if it is feasible to set up a urea plant. But they are India they look at large-scale and the gas that would be available in the first phase is not enough for a fertilizer plant … So maybe in the second gas project … maybe that would be possible for downstream discussion. Right now it is all discussion,” he added.
In January of this year, this newspaper had reported from Reuters that the Indian government had approved the signing of a hydrocarbon memorandum of understanding (MoU) between the two countries.
The proposed MoU was to cover the complete value chain of the hydrocarbon sector including sourcing of crude oil from Guyana, participation of Indian companies in the exploration and production sector of Guyana and cooperation in crude oil refining.
Asian News International (ANI) had said that the Union Cabinet, chaired by Prime Minister Modi, approved the signing of the MoU between the Ministry of Petroleum and Natural Gas, India and the Ministry of Natural Resources, Guyana, on cooperation in the hydrocarbon sector.
According to an official release, it will include cooperation in the area of clean energy, including biofuels as well as the renewables sector, including solar energy.
ANI said that the MoU with Guyana will strengthen bilateral trade, foster investment in each other countries and help diversify the source of crude oil, thus augmenting the energy and supply security of the country.
As per the BP Statistical Review of World Energy 2022, India is the world’s 3rd largest energy consumer, the 3rd largest consumer of oil, the 4th largest refiner and the fastest-growing major economy with rising energy needs.
The BP Energy Outlook and the International Energy Agency estimate that India’s energy demand would grow at about 3 per cent per annum until 2040, compared to the global rate of 1 per cent. Further, India is likely to account for approximately 25-28 per cent of the global energy demand growth between 2020-2040.
With a view to giving further impetus to ensure energy access, availability, and affordability to citizens underpinned by the energy security of the country, ANI said that India is focusing on fostering new partnerships in the hydrocarbon sector, both through diversification of crude oil sources and through the acquisition of quality overseas assets.
Reuters said that India and Guyana have been in discussion about a potential bilateral oil agreement for more than two years.
Last year, it said that Guyana had turned down the Indian government’s request for discounted crude oil purchases during trade discussions.
Yesterday’s MoU was not distributed but Minister within the Office of the Prime Minister Kwame McCoy said that it would be made available later on.
