India has expressed interest in buying one of the 1 million-barrel cargoes Guyana’s government is entitled to in order to test the crude in its refineries. India’s oil demand has risen by 25% in the last seven years, more than any other country, and officials there have pledged to use the country’s position as a leading purchaser as a weapon in an effort to keep prices low. New Delhi is already exercising its growing clout in the crude market. It viscerally opposed a decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to extend production cuts that have lifted the price of oil, and is seeking to diversify its purchases away from top producer Saudi Arabia. State refiners plan to buy 36% less oil from Saudi Arabia in May than normal, sources told Reuters, and the country is now attempting to swap out Saudi supply with new origins like Guyana.
Guyana has become the world’s newest energy hotspot after a consortium led by Exxon Mobil Corp began to produce light crude at the offshore Stabroek block in late 2019. But with no domestic refining nor state oil company, Guyana has relied on private companies like Hess Corp and Royal Dutch Shell PLC to market its share on a spot basis. President Irfaan Ali’s government has relaunched a search for a long-term partner to market its share, but has not yet selected a firm. Long term oil export deals negotiated between governments have been common in some South American oil-exporting countries in recent decades. Venezuela and Ecuador, for example, have supplied large quantities of crude to China under such long-term deals. Guyana and India have strong historical and cultural ties. A large portion of Guyana’s population of around 750,000 is of Indian descent, and Ali’s People’s Progressive Party – which won parliamentary elections last year – is traditionally associated with the Indo-Guyanese population.