(Reuters) – India is in talks with the United States to secure marine cover for vessels shipping oil from the Middle East, as New Delhi seeks to shield buyers from potential supply disruptions caused by the crisis in the Gulf, a government official said on Thursday.
“So far we are comfortable,” the official, who did not wish to be identified, said, adding that the oil ministry is in discussions with major producers and traders to secure oil, liquefied petroleum gas (LPG), and liquefied natural gas (LNG).
U.S. President Donald Trump has ordered the U.S. International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf.
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He also said the U.S. Navy could begin escorting vessels through the Strait of Hormuz, the narrow shipping lane between Iran and Oman through which around a fifth of global oil and gas supplies normally pass.
India, the world’s third biggest oil importer, relies on the Middle East for about 40% of its oil imports and about 85-90% of LPG imports.
The official said India is looking at buying oil from all sources, including Russia, to replenish crude stocks. Indian refiners had reduced Russian oil intake to help New Delhi clinch a trade deal with Washington.
India has already increased imports of oil and cooking fuel LPG from the United States.
Washington is willing to work with India to make sure India’s energy needs are met “in the short term as well as the long term,” said Christopher Landau, U.S. Deputy Secretary of State, at the Raisina Dialogue summit in New Delhi.
“We are an energy-rich country, you know, we want to cooperate with you, that is one of the areas where we can cooperate obviously,” he said.
Due to lower energy supplies from the Middle East region, India’s Mangalore Refinery and Petrochemicals Ltd has suspended refined fuel exports and shut some units at its refinery.
Several Indian companies have cut gas supplies to industries after production was halted by Qatar, India’s largest LNG supplier. The official said the government could “reprioritise” gas allocation to ensure no sector is closed down if the supply situation worsens.
India meets half of its 195 million standard cubic metres per day (mmscmd) of gas consumption through imports. The official said about 60 mmscmd gas is not available due to the closure of the Strait of Hormuz and force majeure by Qatar.
India is in talks with companies including Algeria’s Sonatrach Petroleum, Abu Dhabi National Oil Co, and traders including Total , Vitol, and Trafigura for oil and gas supplies, he said.
Oil minister Hardeep Singh Puri has discussed the current oil market situation with the International Energy Agency and the Organization of Petroleum Exporting Countries.
Reporting by Nidhi Verma; Editing by Louise Heavens and Susan Fenton
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