Oil minister Dharmendr Pradhan is oiling ties with Baghdad as Iraq has emerged as the new ‘Oil King’ for New Delhi, beating Saudi Arabia as its largest supplier of crude.
“Iraq is the second-largest source of crude oil for India. For last six months it has surpassed Saudi Arabia as the largest source,” Pradhan tweeted on Monday after meeting visiting Iraqi foreign minister Ibrahim Al-Eshaiker Al-Jafari.
Though the fate of 39 Indians missing from Mosul appears to dominate the agenda of Al-Jafari’s interactions here, Pradhan used his meeting with him to open investment windows for Indian companies in Iraq’s oil and gas sector.
The investment talks with Al-Jafari comes at a time when India’s relations with Iran are in a knot over delay in awarding the Farzad-B gas field to an Indian consortium, led by ONGC Videsh, which discovered it in 2008.
The delay has peeved New Delhi as it had stood by Iran and continued to buy Iranian oil through the days of western sanctions on Teheran. Unhappy with Teheran’s truant attitude, India has cut back oil imports from Iran by a third “as a measure to protect its economic interest”.
Indeed, India’s oil sourcing pattern has been undergoing changes in recent times as state refiners, who have gone in for massive modernisation drive, are seeking out cheaper crudes to maximise returns on their investments.
Shipments from Saudi Arabia, traditionally the highest, have come down 7-8% as Indian refiners have found a more profitable replacement in Iraqi crude. Saudi crude prices have risen in recent times as the Kingdom cut back production and discontinued discounts.
In contrast, Iraqi Basra Heavy crude costs $3 or so less than similar grade of supplies from Saudi or Dubai, which make up the bulk of oil processed in India. So more and more refiners with more flexible plants to replace costlier crude with cheaper Iraqi oil for higher margins.
Iraqi supplies are also being helped by the fact that Baghdad is going slow in meeting the output cut targets set by Opec, the cartel of oil exporting countries. While Iraq has become India’s numero uno oil supplier, Iran has slipped to the third position.