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The world’s third-largest oil importer, India, has approved the signing of a cooperation agreement with the world’s newest oil exporter, Guyana, covering the entire value chain from crude supply to exploration offshore the South American country.
India’s government approved on Friday the signing of a Memorandum of Understanding (MoU) between India’s Ministry of Petroleum & Natural Gas and the Ministry of Natural Resources of Guyana on cooperation in the hydrocarbon sector.
“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,” among others, the Indian government said in a statement.
The agreement will be for an initial period of five years and will be renewed automatically if the two countries don’t object to its renewal.
The deal with Guyana will help India diversify its sources of crude oil, boosting India’s energy and supply security, said the cabinet of India, which imports around 85% of all the crude oil it consumes and which has been seeking to diversify supply and procure crude at the cheapest possible price.
Guyana, for its part, has a huge potential to boost its oil production and exports this decade.
It became the newest oil-producing country in the world in 2019 after ExxonMobil and its partner Hess Corp began production from the Stabroek block, where the companies have found more than 11 billion barrels of oil equivalent to date.
Currently, Guyana produces around 380,000 barrels per day (bpd) of crude oil, all from Exxon-operated wells. And it looks to triple that production and pump 1.2 million bpd by 2027.
Guyana, together with the United States and Brazil, is expected to lead oil production growth and capacity expansions from producers outside OPEC and the OPEC+ alliance this decade, the International Energy Agency (IEA) said in its annual Oil 2023 report with projections to 2028.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.