Energy diversification

Article in hindu business Line

--- **Energy Diversification in India's Oil Import Strategy**

India’s energy strategy is witnessing a significant shift as it diversifies its oil import basket to reduce dependence on traditional suppliers from the Middle East. This change is driven by the country’s burgeoning energy demands and the need for long-term energy security.

### **Key Trends and Developments**

1. **Shift in Supplier Share**:

The share of Middle Eastern crude oil in India’s import basket is expected to decline. Russian crude has emerged as a major player, accounting for more than 40% of India’s total imports in 2024, with 1.7 million barrels per day (b/d) from January to September. - Iraq: Second-largest supplier with 940,000 b/d.
- Saudi Arabia: Third-largest with 623,000 b/d.
- The US and UAE also remain key suppliers.


2. **Focus on New Suppliers**:

- India is exploring long-term contracts with emerging oil producers like Guyana, spurred by diplomatic visits and strategic discussions.
- Guyana is being eyed as a potential major supplier, marking India’s foray into South American crude markets.


3. **Increased Refining Capacity**:

- India’s refining capacity is set to rise to meet growing demand. Policymakers are intensifying efforts to diversify crude sources, aiming to balance cost and security.

4. **Energy Security through Diversification**:

- The strategy includes reducing over-reliance on Middle Eastern suppliers and leveraging cheaper alternatives, like Russian crude, offered at discounts.

### **Demand Dynamics**

India is one of the fastest-growing oil consumption centers, surpassing China’s growth rate in 2024:
- Oil demand rose by 3.2% year-on-year, compared to China’s 1.7%.
- Petrochemical feedstock requirements are driving this surge, alongside increased industrial and transportation needs.


### **Strategic Implications**

- India’s diversification aligns with its aim to safeguard energy security amid geopolitical shifts and market volatility.
- The approach allows India to tap into more competitive pricing and secure supplies from a broader range of countries, reducing risks associated with regional instability.

### **Looking Ahead**

India’s energy diversification strategy is poised to reshape its import dynamics, emphasizing sustainability, cost-efficiency, and long-term partnerships with emerging oil-exporting nations. ---