NEW DELHI: India has reasons to get excited about Donald Trump’s ‘Drill, Baby, Drill’ slogan, which has become the leitmotif of the 47th US president’s policy to make America rich again by producing, consuming and exporting more oil and gas.
More oil and gas in the market means lower prices, something India needs to maintain the growth momentum as it is heavily dependent on imports. India meets more than 80% of oil and 50% of gas requirement through import.
“What is President Trump saying. Let the era of high prices be over. Let’s control economic inflation. Let’s bring more energy on the market. Let’s have more economic growth so that everybody can win. Now, I’m the energy minister of the world’s third largest consuming and importing country. We have the fourth largest refining capacity. Frankly, these are music to my ears,” Union Petroleum minister Hardeep Puri said at India Energy Week in Delhi.
The US is the world’s biggest oil producer at over 13 million barrels per day. It produces oil in 32 states and coastal waters. Trump’s choice of fracking services executive Chris Wright as energy secretary is, therefore, being seen as a signal that the president may be banking on an encore to reach his policy goal.
Recent analyst notes from major brokerages, however, have been muted in their outlook on production increase as Wall Street focus on reducing costs for value creation. Oil production is a long game. Given the low oil prices, the fracking scene is not likely to see a rush of investors.
That said, more US supplies are likely to reset global energy flows, in addition to keeping prices in check. Rising US oil exports will naturally tend to replace Gulf supplies to Europe. This will be an advantage for Indian refiners at a time when they are looking for alternatives to make up for loss of discounted Russian crude due to the latest US curbs on Russian oil sector.
India does import crude from the US, which had made it to the list of top five suppliers. But it is not always the first choice due to high shipping costs and long travel time. Future prospects will depend on the available arbitrage, where India has an advantage with a diversified basket of 38 or so countries.
But Russia is the elephant in the room. Given Trump’s recent overture to Russian president Vladimir Putin, the war could be headed for an end. If, and when, that happens, India can say cheers with more oil in the market.