Energy could replace Defence as the strongest link in India-U.S. relations, say experts

Energy could replace Defence as the strongest link in India-U.S. relations, say experts

It is likely to replace defence as vital link, amid rising American oil imports

Energy deals are expected to be a key part of discussions between Prime Minister Narendra Modi and U.S. President Donald Trump on Tuesday, with talks over increasing India’s imports of U.S. oil and gas, a clean energy deal including an MoU on building pipeline infrastructure for Liquefied Natural Gas (LNG) between American oil company ExxonMobil, gas transportation technology company Chart Industries and PSU Indian Oil Corporation Limited (IOCL). However, a much-publicised agreement for Indian PSU Petronet to invest $2.5 billion in American LNG Company Tellurian will not be ready for signing, company officials said.

On Monday, Petroleum Minister Dharmendra Pradhan met with the U.S. Secretary of Energy Dan Brouillette to talk about the upcoming agreements. “We jointly reviewed the ongoing Strategic Energy Partnership between our two countries and agreed to take it to the next level,” Mr. Pradhan said in a tweet. In a speech last year, Mr. Pradhan had said that India’s energy imports from the U.S. would reach $10 billion this year.

In 2019, India increased its intake of oil from the U.S. to about 1,84,000 barrels per day (bpd) which was four times more than in 2018, and up from zero imports just four years ago. Some of the increase is due to the fact that India had to slash imports from Iran and Venezuela under threat of sanctions from the U.S., but officials say the U.S. has tried to compensate by subsidising U.S. oil transportation costs. India is now the world’s third largest oil importer, and it is estimated that every $1 change in the price of oil internationally has a $1 billion dollar impact on India’s energy bill.

“This is an area for growth. The U.S. has helped us diversify our energy sources by dealing with gulf countries, increasing its supply of energy so as to keep the price of oil under control,” said a senior official involved in the visit.

Business leaders also say that oil and gas is gaining salience in the relationship.

“Energy will soon take over from Defence as the strongest link in the Indo-U.S. relationship,” said President and CEO of the U.S. India Strategic Partnership Forum (USISPF) Mukesh Aghi, who hosted Mr. Pradhan and Mr. Brouillette for an energy roundtable on Monday. However, he warned that the U.S. would not continue to subsidise oil transport and logistical costs for India, and that India would have to “scale up” its imports in order to make up the difference.

The Tellurian deal for future LNG imports will not be ready for an agreement during the visit, said a spokesperson. Tellurian’s top leadership Chairman Charif Souki and president and CEO Meg Gentle are in Delhi to “progress the discussions with Petronet and have had some crucial meetings toward that end”, Tellurian spokesperson Joi Lecznar confirmed to The Hindu, adding that they are “working to finalise” the agreement documentation by the end of March as they had committed in their MoU signed last September.

On Tuesday, several business chambers will host an India-U.S. business summit on Tuesday, which will discuss boosting Indian exports, the energy partnership, and defence collaborations with the U.S., which will be addressed by Commerce Minister Piyush Goyal, U.S. Commerce Secretary Wilbur Ross, Mr. Pradhan and Mr. Brouillette. While a trade deal that has been negotiated for nearly two years, is not expected to be finalised during the Trump-Modi talks, given the absence of U.S. Trade Representative Robert Lighthizer from the delegation, some suggest the presence of Mr. Trump’s son-in-law Jared Kushner, who is credited with pushing through trade negotiations with China to a Phase-one deal, and the US-Mexico-Canada agreement (USMCA), may also play a role in nudging the India-U.S. trade talks to a conclusion as well.

Your email address will not be published.