MOSCOW (MRC) -- India and Iraq have signed an energy-cooperation agreement spanning oil exploration and refining as well as work toward establishing a 10-year crude oil supply agreement from the Middle East nation, reported Hydrocarbonprocessing.
Iraq is eager to boost oil supplies to India, one of the largest oil consumers, in the face of shrinking demand from the US, which has been getting more of its oil and gas from domestic shale deposits in recent years.
India also wants to increase imports from Iraq, its second-largest oil supplier after Saudi Arabia, as a replacement for dwindling shipments from traditional supplier Iran amid the West's sanctions on Tehran.
Neither side said how much additional oil India is likely to import under the long-term agreement. India's crude-oil imports from Iraq are currently estimated at about USD20 billion annually.
Earlier in the day, Indian Trade Minister Anand Sharma said that the two countries would explore the possibility of a trade-payment mechanism in their local currencies as the nations seek more partnerships in various sectors.
Last year, India introduced a rupee trade-payment mechanism with another major oil exporter, Iran. However, the international sanctions have made it tough for shippers to secure insurance for carrying Iranian oil to India.
Indian oil companies, which so far haven't actively participated in Iraq, now appear more interested in tapping more oil from the country.
Iraqi Prime Minister Nouri al-Maliki said his country will seek partnerships with India in pharmaceuticals, chemical and agricultural sectors.
As part of the discussions, Iraq also offered state-run Indian companies exploration of three oil and gas blocks in Middle Furat Oil Field. It also allowed three Indian oil companies - ONGC Videsh Ltd., Mangalore Refineries & Petrochemicals Ltd. and Reliance Industries - to bid for the Nasiriya oil and gas project.
We remind that, as MRC informed previously, India's petrochemical industry is one of the fastest growing industries in the Indian economy. It provides the foundation for manufacturing industries such as pharmaceuticals, construction, agriculture, packaging, textiles, automotive, etc.
The future of the Indian petrochemicals industry is bright with domestic demand driving the market for products. With Government support slowly falling into place, the future could see more investments from multinationals as well as domestic companies. Thus, the UAE-based company, Uniplas Petrochemicals, is planning to set up a 150,000 tpa capacity petrochemical complex in India, worth nearly Rs 55bn (USD1m), by using foreign direct investment to produce caustic soda, ethylene, chlorine, PVC (polyvinyl chloride) and PVC compounds. Besides, SIBUR, Russia's largest petrochemical company, and Reliance Industries will bulild a butyl rubber plant with the capacity of 100,000 tpa, which is expected to kick off in next six months in Jamnagar.
MRC