The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has approved the signing of Memorandum of Understanding (MoU) between the Ministry of Petroleum & Natural Gas, Government of India and the Ministry of Natural Resources, Republic of Guyana on cooperation in the hydrocarbon sector.
Details of the MoU:
The proposed MoU covers the complete value chain of hydrocarbon sector including sourcing of crude oil from Guyana, participation of Indian companies in Exploration and Production (E&P) sector of Guyana, cooperation in the areas of crude Oil refining, capacity building, Strengthening bilateral trade, collaboration in natural gas sector, collaboration in developing regulatory policy framework in oil & gas sector in Guyana; Cooperation in the area of clean energy including biofuels as well as renewables sector including solar energy etc.
The MoU on cooperation in hydrocarbon sector with Guyana will strengthen bilateral trade, foster investment in each other countries and help diversifying source of crude oil, thus augmenting the energy & supply security of the country. It will also provide opportunity to Indian company to participate in E&P sector of Guyana, gaining experience by working with global oil & gas companies in upstream projects, thus fostering the vision of “Aatmanirbhar Bharat”.
Implementation strategy and targets:
This MoU shall enter into force on the date of its signature and will remain in force for a period of five years and shall be automatically renewed thereafter on a quinquennium basis unless either Party gives the other Party a written notice three months in advance of its intention to terminate this Understanding.
In recent times, Guyana has gained significant salience in the oil & gas sector becoming the world’s newest oil producer. The new discoveries of 11.2 billion barrels of oil equivalent, amounts to 18% of total global Oil & Gas discoveries and 32% of discovered oil. As per OPEC World Oil Outlook 2022, Guyana is projected to see a significant ramp-up in production, with liquids supply growing from 0.1 mb/d in 2021 to 0.9 mb/d in 2027.
Further, as per BP Statistical Review of World Energy 2022, India is the world’s 3rd largest energy consumer, 3rd largest consumer of oil and 4th largest refiner and the fastest-growing major economy with rising energy needs. BP Energy Outlook and International Energy Agency estimate that India's energy demand would grow at about 3% per annum till 2040, compared to the global rate of 1%. Further, India is likely to account for approximately 25-28 per cent of the global energy demand growth between 2020-2040.
With a view to give a further impetus to ensure energy access, availability, affordability to citizen underpinned by energy security of the country, India is focusing on fostering new partnership in hydrocarbon sector, both through diversification of crude oil sources and through acquiring quality overseas assets. This dilutes dependencies on a single geographical/economic unit and increase India’s strategic maneuverability.
Noting the significance of Guyana and given the renewed momentum to the bilateral relationship in hydrocarbon sector, and the number of possible areas of cooperation, it is proposed to enter into an MoU with Guyana on cooperation in the hydrocarbon sector.