India is looking to countries as far away as Venezuela for oil, media reports say. The country's abysmal power deficit was exposed when massive blackouts affected more than 640 million people late last month. That, coupled with continuing Western sanctions on Iran have forced the Indian hand, it appears. Leading broking and consultancy firm Gibson expects rising demand for power in the country to exacerbate circumstances. The result, analysts say, will be beneficial for the tanker segment with increased tonne-miles for Indian crude imports a near certainty.
Says Gibson, "India’s geographical location makes Iran the perfect source for the quantities of crude now demanded in the region. India is currently the fourth-largest oil importer in the world, with about 80% of its crude requirement needing tanker transportation. State run oil companies have identified the US, Canada, Australia and West Africa as potential areas, not just to source crude, but also opportunities for investment. India is following as similar path taken by China to own or control the source of its supplies of raw materials to feed economic growth. India has cash to invent in partnerships with other nations."
Indian public sector giant ONGC has recently announced that it will invest $2.7 billion in Venezuelan oil fields; in addition, the two countries will build refineries together, including one in the Bay of Bengal in a joint Venezuelan-Indian Oil Corporation venture.
"It is estimated that only about 2% of India’s power generation comes from oil", Gibson says. "However, power is increasingly becoming a serious issue which the government must address quickly, not only to support a growing economy but also a growing population". Gibson notes that urbanisation and "demand for material wealth in terms of cars and white goods will continue to drive forward Indian oil demand" and put pressure on energy and the environment, as it did in China.