Prime Minister Manmohan Singh with Iraq counterpart Nouri al-Maliki in New Delhi on Friday. Picture by Ramakant Kushwaha
New Delhi, Aug. 23: India has asked Iraq for a 10-year assurance of crude supply and better terms relating to payment of its burgeoning oil bill at a time the rupee’s slide against the dollar is threatening to shred the country’s import budget.
Iraq Prime Minister Nouri al-Maliki today told his Indian counterpart Manmohan Singh and other Indian ministers he met here that Baghdad would consider New Delhi’s demands, a joint statement by the two nations said.
Iraq has emerged as India’s second-largest oil supplier after Saudi Arabia in recent months, displacing Iran at a time Tehran is still struggling to break the shackles of western sanctions.
India’s annual oil imports from Iraq are worth $20 billion, which is more than the total bilateral trade between India and Britain and which, officials here said, will likely increase by at least 50 per cent over the next five years. In rupees, that $20 billion is today costing India 15 per cent more than it did a year ago because of the slide against the dollar.
Concerns about the impact of a failure by the rupee to recover significantly, at a time India’s oil imports are only expected to rise, pervaded the air through the multiple meetings al-Maliki held here.
Apart from Singh, the Iraq Premier met external affairs minister Salman Khurshid, oil minister Veerappa Moily, commerce minister Anand Sharma, President Pranab Mukherjee and Vice-President Hamid Ansari.
The two nations signed agreements on oil exploration, joint training programmes for diplomats, Indian assistance for the resurrection of the Tigris and Euphrates waterways and on regular foreign office consultations.
“The Prime Minister and I have agreed that our energy trading relationship should be turned into a strategic partnership, including through joint ventures in oil exploration, petrochemical complexes and fertiliser plants,” Singh said.
But officials conceded, and the joint statement underlined, that energy, and how India planned to pay for it, remained the cornerstone of New Delhi’s relationship with Baghdad.
India has revalidated a contract Iraq has awarded to the public sector ONGC for exploration on a fresh oil block.
Iraq has also pre-qualified ONGC, Reliance and Mangalore Refinery and Petrochemicals Limited for bidding to access oil blocks in Nasiriyah on the banks of the Euphrates.
But India remains concerned about long-term access to Iraqi oil, and about the costs it will have to bear, officials said. Today, India proposed a pact that will bind Iraq to a 10-year commitment for the supply of crude.
It also asked Iraq to consider a payment mechanism like the one India uses with Iran, which accepts payments in rupees linked to Iran’s currency, independently of day-to-day fluctuations in dollar exchange rates.