By Neil Marks and Nidhi Verma
(Reuters) – India, the world’s third-largest crude consumer and importer, has approached Guyana’s government about a possible long-term deal to buy the South American country’s oil, a Guyanese official said.
India has expressed interest in buying one of the 1 million-barrel cargoes Guyana’s government is entitled to in order to test the crude in its refineries, according to Guyana’s Natural Resources Minister Vickram Bharrat. If the crude is compatible, the parties could begin talks on a long-term arrangement.
India’s oil demand has risen by 25% in the last seven years, more than any other country, and officials there have pledged to use the country’s position as a leading purchaser as a “weapon” in an effort to keep prices low.
New Delhi is already exercising its growing clout in the crude market. It viscerally opposed a decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to extend production cuts that have lifted the price of oil, and is seeking to diversify its purchases away from top producer Saudi Arabia.
State refiners plan to buy 36% less oil from Saudi Arabia in May than normal, sources told Reuters, and the country is now attempting to swap out Saudi supply with new origins like Guyana.
Private Indian refiner HPCL-Mittal Energy Ltd purchased India’s first-ever cargo from Guyana this month, but the talks have taken place on a government-to-government basis.
“India is interested in taking Guyana’s share of its crude, based on mutual agreements, as part of its crude source diversification across the world,” said one source with knowledge of the talks, who spoke on the condition of anonymity.
The two parties are still negotiating pricing, said the person, adding that the crude would be processed by state-owned refineries in India.
Bharrat said pricing was the “most important” factor for Guyana in any potential deal.
“First and foremost is us getting the best price for our crude,” he told Reuters in a telephone interview.