Energy Sector Current Affairs

India gets first-ever U.S. crude shipment

India received first ever shipment of US crude oil of 1.6 million barrels, purchased by state-run Indian Oil Corporation (IOC) at Paradip Port in Odisha. It was imported on board of MT New Prosperity, a very large crude carrier (VLCC) that had left US Gulf Coast on August 19, 2017 and arrived at Paradip port.

Key Facts

IOC will process crude at its refineries located at Paradip, Haldia (in West Bengal), Barauni (in Bihar) and Bongaigaon (in Assam). This was one of first shipments to India since United States stopped oil exports in 1975.  With this India, the world’s third-largest oil importer joins other Asian countries like South Korea, Japan, Thailand,  China and Taiwan to buy US crude oil as they seek to diversify oil imports from other regions after the OPEC production cuts raised prices of Middle East heavy-sour crude ( grades with a high sulphur content).

Background

The delivery of shipment follows recent commitments to US oil purchases by Indian state refiners. State-owned Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) also have placed orders for about 2.95 million barrels and 1 million barrels of US crude respectively for their Kochi and Vizag refineries.

Indian companies, both public and private, have invested about $5 billion in US shale assets. They have also contracted 5.8 million tonnes per annum of liquefied natural gas (LNG) from US and the first shipment is expected to be delivered to India in January 2018.

India-US Energy relations

The IOC purchase comes after Prime Minister Narendra Modi’s visit to the US in June 2017 when President Donald Trump had assured that US looks forward to export more energy products to India. They had committed to expand and elevate bilateral energy cooperation through strategic energy partnership.

Under this partnership, both countries are elevating cooperation in field of energy, including in cleaner fossil fuels, renewables, nuclear, and cutting edge storage and energy efficiency technologies. The first delivery of oil imports is considered as significant milestone in growing partnership between the US and India. US crude oil shipments to India have potential to boost bilateral trade between both countries by up to $2 billion.

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India becomes associate member of IEA

India, world’s 3rd largest energy consumer has joined International Energy Association (IAE) as associate member. India will also now have a greater say in global energy issues.

With India as a associate member, IEA now formally covers 70% of the world’s energy consumption, thus increasing its relevance.

Key Facts
  • India’s participation will enrich the energy efficiency and renewable sectors of IEA members and other countries.
  • India will gain from IEA’s data gathering processes, survey methodologies and range of energy data, which will enable India in the near future to set up its own robust integrated database agency.
  • It also gives an opportunity to India to be the voice of the developing world and represent the interests of the emerging markets. It will enable India to be involved in the key committees and dialogues of the IEA. 

About International Energy Association (IEA) 

  • IEA is an inter-governmental organization established in 1974 as per framework of the Organisation for Economic Co-operation and Development (OECD).
  • It was established in the wake of the 1973 oil crisis after the OPEC cartel had shocked the world with a steep increase in oil prices.
  • Members: Presently it has 29 member countries. India is lone associate member of IAE.
  • Headquarters (Secretariat): Paris, France.
  • Mandate: Its prime focus is on the “3Es” of effectual energy policy: energy security, economic development and environmental protection.
  • It also seeks to promote alternate energy sources (including renewable energy), rational energy policies and multinational energy technology co-operation.
  • It acts as energy policy advisor to 29 member countries and also non-member countries like China, India and Russia.
  • Publications: World Energy Outlook report.
  • Relevance: Today, IEA is an important part of global dialogue on energy, providing research, statistics/data, analysis and recommendations on the global energy sector.
  • Over 70% of world’s energy consumption is now under the IEA umbrella which increases its relevance in global energy governance manifold.

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