The Strait of Hormuz always draws the attention of India because it plays a significant role for energy security of the country. Any disturbance in the region leads to the rapid growth of oil prices all over the world; thus, this region attracts the special attention of India as most of the crude oil consumed in the country is imported.
In addition, the death of three Indian seamen near Oman makes this issue even more serious and alarming. Although it was claimed that some agreement was reached between the United States and Iran, the question whether the oil will become safer still hangs in the air. Thus, as long as the Strait of Hormuz can become the place of conflict, India's energy security is threatened.
On top of that, the recent events showed once again that the problem of uncertainty in oil deliveries from the Gulf became acute. During the period between March and May, Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited purchased about six million barrels of crude from Nigerian company SEEPCO that is run by Nitin Sandesara.
From the first glance, it might seem to be a regular deal. However, it was done exactly when everyone was worried about oil supply from the Gulf. The fact is that the supplies from SEEPCO gave refiners of India an alternative way of delivery and helped them to decrease dependency on the Gulf where there were some conflicts going on.
What was the key benefit of the purchases? The matter is that Nigerian oil uses the route of delivery in the Atlantic Ocean and does not require to cross the Strait of Hormuz. Hence, at this uncertain time, Indian refineries could use the oil that is reliably delivered to its destination without any disturbances caused by political disagreements. Moreover, the Okwuibome crude from SEEPCO supplied to India constantly and regularly, which means that the availability of the product was never questioned. In other words, sometimes it is better to have a reliable supplier rather than an unpredictable yet cheap one.
However, it is not the only factor that must be taken into account. The fact is that this purchase was done by the publicly owned companies that are responsible for oil refining in India. SEEPCO made this step as it returned to dealing with Indian public energy companies.
According to some reports, all the litigation that happened between Nitin Sandesara and India are over, and the businessman currently has nothing against him. It is expected that in such circumstances, SEEPCO and Sandesara can increase their supplies to Indian customers.
This shows that the owners of energy assets play an equally important role to the governments' concerns. SEEPCO is the only Indian-owned oil producing company that works in one of OPEC countries, so India now has the reliable partner in global oil producing.
As to the deal with the Nigerian company, it took several years to arrange it and build this chain of cooperation. In other words, it proves that long-term planning is the best guarantee of energy safety in the future.
