India signed a ‘strategic partnership framework’ on Wednesday with the International Energy Agency (IEA), the world’s premier energy monitor, further bolstering the country’s energy security and it’s cleaner fuel transition plans.
The development comes at a time when international energy markets have been volatile and amid rising tensions between China and India, the world’s second- and third-largest crude oil importers.
“The Strategic Partnership Framework represents a new phase in the relationship between the IEA and India, the world’s third-largest energy consumer, making it the first IEA Association country to take a formal step to further advance ties with the Agency," IEA said in a statement.
IEA’s 30-member countries also hold 1.55 billion barrels of public emergency oil stocks. In addition, 650 million barrels are held by industry under government obligations and can be released as needed.
The MoU was signed by India’s power secretary Sanjiv Nandan Sahai and Dr. Fatih Birol, IEA’s executive director.
“This partnership will lead to an extensive exchange of knowledge and would be a stepping stone towards India becoming a full member of the IEA," the power ministry said.
The Paris-based agency is keen on India becoming a member as India’s entry will boost the global energy security apparatus and add heft to its dealings with the Organization of the Petroleum Exporting Countries (Opec)-plus grouping.
Saudi Arabia, the world’s largest oil producer has recently cut production, leading to price volatility. Opec makes up about 40% of global output and 83% of India’s oil imports.
“The contents of the strategic partnership will be jointly decided by the IEA members and India, including a phased increase in benefits and responsibilities for India as an IEA strategic partner, and building on existing areas of work within Association and the Clean Energy Transitions Programme (CETP), such as energy security, clean and sustainable energy, energy efficiency, enhancing petroleum storage capacity in India, expansion of gas-based economy in India etc.," the statement said. “This marks a major milestone in global energy governance that could lead to eventual IEA membership for India," the statement added.
Eligibility criteria for becoming a member includes maintaining emergency oil reserves equivalent to at least 90 days of net imports.
India stores 10 days of the country’s crude oil requirements currently, with domestic refiners also maintaining 65 days of crude storage. In addition, the government is building strategic crude oil reserves to support another 12 days of crude oil needs.
The partnership with IEA also comes at a time when US President Joe Biden has recommitted to the Paris Agreement. Some of the strategies adopted to meet the objective of energy security and energy transition by India include a faster clean energy trajectory.