India and Iraq are in discussions to form a strategic crude oil partnership that could prove very beneficial to both countries.
India’s oil storage
India is currently constructing its first emergency oil storage terminal and hopes production will be complete by 2011. Once complete, these terminals will hold 1.33 t of oil and two more storages terminals are planned for completion in 2012, which will bring total storage capacity to 5 million t. The three terminals are estimated to cost US$ 514 million.
India’s storage offer to Iraq
As part of the deal between the two countries, India is offering Iraq use of some of the storage space at the two terminals due for completion in 2012. This will ensure constant availability of an oil supply from Iraq as India currently imports approximately 77% of its domestic oil demand. India currently purchases approximately 220 000 bpd of oil from Iraq and as domestic demand rises, so will its imports from Iraq.
Iraq’s offer to India
In exchange for storage space, Iraq is offering to increase its supplies to India by 60% and extend its cooperation to India’s refining sector under long term contracts with Indian companies. Iraq is looking to secure joint investments in Indian refineries and is also seeking involvement in the revamp and modernisation of Indian facilities.
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