Iraq, Saudi Arabia and Iran are the three biggest oil exporters to India. Saudi Arabia is keen to replace Iraq from the top slot and completely eliminate Iran from the lucrative Indian market. While Saudi Arabia offers massive FDI opportunities, Iran, on the other hand, gives Delhi access to energy-rich Central Asia and connection with Afghanistan. EurAsian Times analyses the competition between Iran and Saudi Arabia over India.
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According to the International Energy Agency, India and China are among the world’s largest countries in terms of energy consumption. India runs on the policy of supply from various sources of oil and gas demand and it has been a basic principle of its international diplomacy.
Iran and Saudi Arabia are two major countries with oil and gas reserves. Both of them supply oil to India. According to the International Energy Agency data and recent EurAsian Times report, India is the third largest buyer of Iranian oil, after Iraq and Saudi Arabia.
In the year 2017, India imported about 2,79,000 barrels of oil every day from Iran. Similarly, in the first six months of the year 2018, India has imported 3,57,000 barrels of oil per day from Saudi Arabia.
Iran, after its nuclear agreement, invited foreign companies to invest in their oil and gas fields. Indian companies also expressed the desire to invest in the Farzad-B gas field.
To save the Indian market post the US sanctions on Tehran, Iran removed the cost of supplying oil to India for some time. In the same way, Iran also started considering special exemptions to Indian buyers and, as per reports, it wanted to provide insurance cover to India’s oil tankers.
Saudi Arabia’s Oil Diplomacy
Saudi Arabia is working on a comprehensive plan for the Indian market and has allocated nearly 500 billion dollars as funding for the Indian market.
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Due to regional tension between Riyadh and Tehran, Saudi Arabia has attempted to keep Iran’s stake in India’s energy market very low. For this, Saudi Arabia has chosen the path of investment in India. In view of its active presence in India’s energy market, Saudi firm ‘Aramco’ has recently opened its new office in New Delhi.
Saudi Investment in India
In the winter season last year, India had offered Saudi Arabia a dialogue for partnership in its strategic reserves program. In April of this year (2018), the consortium of Saudi Arabia’s national oil company ‘Aramco’ and three government oil companies signed a $ 44 billion agreement to set up a refinery in the Indian state of Maharashtra.
According to the statement of Aramco President Amin Nasir, this oil refinery will be able to produce 1,20,000 barrels of oil per day after completion of the plant.
In view of rising oil demand and increasing its share in the global market, ‘Aramco’ is looking for opportunities in foreign oil refineries. And as Nasir says, ‘Aramco’ wishes to invest in the field of oil refinery, petrochemical and fuel sales in India too. Saudi Arabia wants to increase its oil production and replace Iraq to become India’s largest exporter of oil.
US Oil, LNG and India’s Market
In the last months, the US has increased its oil exports in India and has also entered into an agreement with India, under which it will export its LNG to India for 20 years.
Iraq and Saudi Arabia are also trying to increase their presence in the Indian market. Being an American ally, Saudi Arabia is putting a lot of emphasis on expelling Iran from India’s lucrative energy market.
Despite Riyadh’s attempts, Iran holds great significance for India as it not only assists New Delhi in bypassing Pakistan to reach Afghanistan but also gives air to India’s ambitions to reach to Central Asia and compete with China.
At the same time, if Iran wants to sustain itself in the energy market of India and wants to take advantage of the partnership of Indian companies in the field of oil and gas then it will have to actively engage India, diplomatically and ward-off Saudi challenge.
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