India considers more energy imports from US ahead of PM Modi's meeting with Trump, says report

Donald Trump, PM Modi

The Indian government is considering how much more energy the country can import from the US, The Economic Times reported. This comes days before Prime Minister Narendra Modi's visit to the country and his subsequent meeting with US President Donald Trump.

Officials from the oil ministry and executives of state-run oil and gas companies have held discussions on the ongoing energy imports from US, the chances of increasing them further and the obstacles in doing so, sources told the publication.

Moneycontrol couldn't independently verify the report.

Prime Minister Narendra Modi will visit US on February 12-13 and hold bilateral talks with President Donald Trump, the ministry of external affairs had said on Friday.

Notably, US is the largest producer of oil and gas, and is also the world's biggest exporter of liquefied natural gas (LNG). It produces 19.4 million barrels of oil per day, accounting for one-fifth of the total global production. The country also has the ninth largest oil reserves in the world at 68.8 billion barrels. It is the fifth-largest crude exporter to India, following Russia, Iraq, Saudi Arabia and UAE.

While US is a major destination for such imports, Indian refiners are open to buying crude from anywhere, if commercially attractive, industry executives told The Economic Times.

"The state can influence the pricing decisions in Russia and the Middle East, where national oil companies dominate. In the US, it's the private producers, and Trump can't instruct them on how to price their crude," a refinery executive told the publication.

Notably, US imports, like those of Russia, face the challenge of distance as the supplies must cover the higher shipping costs. Indian LNG buyers also reportedly have highlighted that there is hardly any US volume available for long-term deals at present, and new contracts can be signed only for supplies that start in 2028 or later.

Additionally, large domestic gas consumers such as power plants and city gas distributors are currently not willing to sign any long-term gas purchase deals as they believe they can get it cheaper later, as per the report.

Since becoming the US President for the second time, Trump has emphasised increasing oil and gas production in the US as well as their exports. Experts believe that this will result in a rise in India's imports of oil from the US. This however will be subject to several factors such as freight costs, type of crude oil available and the discounts offered by producers.

"India will import more oil from the US but (Indian) companies would evaluate options and preferably prioritise Middle East suppliers. The final call would be based on the economics of it including freight charges and discounts provided by the countries," said Prashant Vasisht, vice president and co-head, corporate ratings, ICRA.

India is a net importer of crude oil with over 85 percent of its domestic demand being met by shipments from countries including Russia, Saudi Arabia, Iraq and the US. Since the war between Russia and Ukraine, India's reliance on oil imports from Moscow has sharply risen on account of discounted crude from the country.