India diversifying sources to reduce dependence on Iranian oil'

India will increase imports of crude oil from Africa and Latin American countries to reduce dependence on Gulf countries, especially Iran which is facing sanctions from the US and the European countries, a senior government official said Wednesday.

"We have started diversifying crude oil purchases. Earlier, all our crude oil imports were from Gulf, now only 60 percent comes from Gulf countries,” said A.R. Ghanshyam, joint secretary (Gulf) in the external affairs ministry.

He said crude oil imports from Africa and Latin American countries especially from Venezuela have increased sharply in the recent years.

Saudi Arabia is the biggest supplier of crude oil to India followed by Iran.

Although imports from Saudi Arabia has remained steady at around 27 million metric tonne per year, oil purchases from Iran have gone down in the last couple of years.

Imports from Iran fell to 18.5 million metric tonnes in 2010-11 as compared to 21.19 million metric tonnes in the previous year. They are likely to drop further in the current financial year.    
Asked whether India would cut oil imports from Iran in view of the sanctions, Ghanshyam said: “Our policy is to diversify the sources. We don't consider the relationship with one country at the expense of other country.”

Addressing an energy conference organised by the Confederation of Indian Industry (CII) here, Ghanshyam, however, admitted that despite the diversification Gulf countries would remain the most important source of energy for India in the coming years.

“Gulf region is very important for us. Our 60 percent of oil import is from the Gulf region. Out of the $620 billion foreign trade registered in 2010-11, $135 billion was with the Gulf region,” he said adding that over six million Indian diaspora contribute over 50 percent of India's foreign remittances.

“Most importantly the Gulf region has trillions of dollars of investible surplus and is looking at India as a promising investment destination,” he said.

In his address, Girijesh Pant, of the Centre for West Asian Studies in Jawaharlal Nehru University here, said: "Gulf countries have higher expectations as far as co-operation with India is concerned and energy as well as oil and gas is only one dimension of this cooperation."

"However, India needs to factor in the political tension within Iraq and other issues like the impact of Arab Spring on India when developing its policy for the region,” he added.
Atul Chandra, an advisor at Reliance Industries Limited, said India needed to further diversify sources to ensure long-term energy security.

“While some effort has been made to ensure energy security, more needs to be done,” said Chandra, who is also the former chairman and managing director of the state-run Oil and Natural Gas Corporation (ONGC).