Export of American crude oil to India will create jobs, economic stability and national security in both countries, US Energy Secretary Rick Perry has said, days after the first ever shipment of US crude oil landed in Odisha.
The shipment, loaded at Saint James, Louisiana and Freeport, Texas terminals last month, docked at Paradip port in Odisha on October 2.
"This event represents the growing and important strategic energy partnership between the US and India, and I look forward to exploring new opportunities to expand the role of reliable, responsible, and efficient energy sources with our allies," Perry said yesterday.
He said the export of US crude oil to India will create jobs, economic stability and national security in both countries.
Following Prime Minister Narendra Modi's visit to the US, Indian companies ramped up purchases of American crude.
To encourage US crude purchases, the government has allowed refiners to use a foreign rather than an Indian-owned vessel for the purchase. Indian refiners typically have to use domestic vessels for their crude imports.
In a blog post yesterday, the US State Department said increased Indian purchases of US crude oil are a direct outcome of the June visit of Modi to the White House during which the leaders committed to expanding and elevating bilateral energy cooperation through a Strategic Energy Partnership.
"We expect this first shipment of crude oil will be followed by many more as both the Indian Oil Corporation and Bharat Petroleum have placed orders for over 2 million barrels from the United States," said Tom Vajda, Office Director for the India Desk in the South and Central Asia Bureau of the State Department.
US crude oil shipments to India have the potential to boost bilateral trade by up to USD 2 billion.
"Not only does this week's shipment demonstrate the strength of the US-India bilateral relationship, but also how our relationship with India continues to benefit the American economy," Vajda said.
Buying US crude has become attractive for Indian refiners after the differential between Brent (the benchmark crude or marker crude that serves as a reference price for buyers in western world) and Dubai (which serves as a benchmark for countries in the east) has narrowed.
India, the world's third-largest oil importer, joins Asian countries like South Korea, Japan and China to buy US crude after production cuts by oil cartel OPEC drove up prices of Middle East heavy-sour crude, or grades with a high sulphur content.