«New breakthroughs! oil shipments frm US to India has started,» the Indian Embassy in Washington tweeted on August 16, 2017, after Indian Ambassador to the US, Navtej Sarna, handed over papers for the shipment to the Texas Governor Greg Abbott.
The 1st shipment of American crude oil is likely to reach India in the end of September 2017, opening new vistas in the Indo-US ties.
With this India, the world's 3rd-largest oil importer, joins South Korea, Japan and China to buy American crude after production cuts by OPEC drove up prices of Middle East heavy-sour crude or grades with a high sulphur content.
The 1st lot of 2 million barrels costs $100 million, but given the volume being contemplated by Indian companies, this new development is expected to boost the bilateral oil trade to $ 2 billion.
While the 40-year-old ban on export of American oil was lifted by Barack Obama in December 2015, the real move started during the maiden meeting between PM Modi and President Trump on June 26 when the 2 leaders agreed to deepen the engagement in the energy sector.
Soon thereafter, Indian companies started purchasing crude from the US.
2 Indian oil giants, Indian Oil Corporation and Bharat Petroleum, placed orders for over 4 million barrels.
The Indian Oil Corporation placed its 1st order in July and the 2nd order on August 10.
Bharat Petroleum Corp made its 1st purchase of US oil, buying high Sulphur crudes Mars and Poseidon.
BPCL has bought a cargo containing 500,000 barrels each of Mars and Poseidon for delivery from September 26 to October 10.
Hindustan Petroleum Corp Ltd (HPCL) is also looking at buying US crude oil.
IOC Finance Director A. Sharma told PTI recently that buying US crude has become attractive for Indian refiners after the differential between Brent and Dubai has narrowed.
Even after including the shipping cost, buying US crude is cost competitive to Indian refiners, he said.
While this is the 1st crude oil import from the US, Indian companies have made significant investment in purchasing energy assets in the United States.
4 Indian companies have invested approximately $5 billion in shale assets in the US.