Nigeria and other African nations could play a central role in efforts by India to diversify its sources of oil and gas, India’s Oil Minister, Mr. Dharmendra Pradhan, said yesterday, as the nation strives to reduce its energy reliance on the Middle East.
India, the world’s third-biggest oil importer, has asked state refiners to speed up the diversification of oil imports to gradually cut their dependence on the Middle East after the Organisation of Petroleum Exporting Countries (OPEC) decided earlier this month to continue production cuts in April.
“As India seeks to further diversify sourcing of crude oil and LNG, Africa has a central role – largely due to its proximity and absence of any choke points in trans-shipments,” Pradhan told an industry summit.
Reuters reported that India imports over 80 per cent of its oil and has a huge oil import bill.
Africa’s share of India’s oil imports are about 15 per cent or about 34 million tonnes of oil last year, Pradhan said, with the country’s imports of gas from Africa also gradually increasing.
India traditionally buys oil from Nigeria, Angola, Algeria, Egypt and Equatorial Guinea, but in recent years, it has bought the commodity from Cameroon, Chad, Ghana and Côte d’Ivoire.
“Therefore, we would naturally be seeking commercial partners in Africa to meet India’s growing energy needs through imports of crude oil, LNG and other petroleum and energy products,” he stated.
State-run Indian companies have invested $8 billion in oil and gas assets in various African nations and India the third-largest refiner in the world is a major exporter of refined fuels.
Africa is the second-largest destination for Indian refined fuels, Pradhan said, adding that rising demand for technology, fuels, skills and investment in some African nations offer India opportunities for equity investment and two-way tie-ups.
Nigeria is India’s 13th largest country of import behind other crude oil exporters such as the US, Iraq, Saudi Arabia, and UAE and in contrast India is Nigeria’s largest export destination.
In the first quarter of 2020, Nigeria’s export to India was N637.5 billion or 15.6 per cent of total exports, with crude oil representing N526.8 billion of the total export amount.
India replaced the US as Nigeria’s largest export destination for crude as demand for crude increased in the second-most populous country in the world.
Meanwhile oil prices have continued to be weighed down by concerns about immediate demand amid a fresh rash of lockdowns in some countries, especially in Europe.
From a high of $71.38 earlier in the month, Brent Crude fell by 4.18 per cent to $61.92 before rising to about $63 yesterday.
The US crude prices traded below the $60 a barrel mark, at $59.02, down by 4.13 per cent on the day, but later picked up and sold for $60.66 as analysts point to an oversupply on the market.
Recovery remains fragile as new or extended lockdowns in Europe, including in Italy, France, and Germany, prompted concerns about mobility and oil demand in the next few weeks, while the vaccination programmes in many European countries are lagging behind the United States and the UK, for example, in terms of vaccination rates.
Europe’s biggest economy, Germany, is extending its lockdown through April 18, with a stricter lockdown for Easter to “break the exponential growth of the third wave,” according to Chancellor Angela Merkel.
In December last year, President Muhammadu Buhari signed the 2021 budget based on a crude oil benchmark price of $40 per barrel, with production for this year estimated at 1.86 million barrels per day, although the country has been producing less due to the OPEC quota cuts.