Donald Trump’s India visit: Deal likely for more US oil, gas to trim trade gap

Though the much-anticipated trade deal with the US is unlikely to be concluded during the February 24-25 visit of President Donald Trump, India is expected to agree to buy additional oil and gas from the US to narrow the trade deficit.

US trade deficit with India declined to $17 billion in 2018-19 from $22 billion in 2016-17 as India started importing oil and gas from America in 2017. In 2018-19, India’s crude oil import from the US stood at $3.6 billion and LNG import at $527.14 million.

In April-December 2019, India imported crude oil and LNG worth $3.7 billion and $576.28 million, respectively, from the US, making it the sixth largest supplier of crude oil and the fifth largest supplier of LNG to India.

Last September, Prime Minister Narendra Modi met the brass of US oil companies in Houston for supply of crude oil and gas at discounted prices. Oil purchases from the US, which started in 2017-18, have already crossed about 6 million tonnes a year.

Purchasing hydrocarbon from the US may not be the cheapest option but will help trim the trade imbalance between the two, which has been in India’s favour, according to persons familiar with the issue.

A deal between Tellurian Inc and Petronet LNG will focus on price of gas import. The US-India Strategic Energy Partnership will get a boost with Trump’s visit. India’s trade surplus with the US is minuscule compared to China’s, but Washington is keen to reduce gap.

US oil companies have been producing record amounts of crude oil in the last five years. According to a report by the BP Statistical Review of World Energy 2019, the global production of crude oil in 2018 grew by a whopping 2.2 mbd (million barrels per day), which is more than double its historical average.

“The vast majority of this growth was driven by US production, which grew by 2.2 mbd — the largest annual increase by a single country,” the report said.

ET News
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