The Union Cabinet, led by Prime Minister Narendra Modi, has given the green light to a Memorandum of Understanding (MoU) between India's Ministry of Petroleum and Natural Gas and Guyana's Ministry of Natural Resources. This pact aims to boost collaboration in the hydrocarbon sector.

The agreement, as per an official statement, encompasses various aspects of the hydrocarbon industry, such as sourcing crude oil from Guyana, involvement of Indian companies in exploration and production in Guyana, cooperation in refining crude oil, capacity building, enhancing bilateral trade, collaboration in the natural gas sector, and the development of regulatory policies for Guyana's oil and gas domain.

Moreover, the MoU extends its scope to clean energy initiatives, including biofuels, and renewable energy sectors like solar power.

The collaboration with Guyana is anticipated to fortify bilateral trade, encourage investments between the two nations, and diversify the crude oil supply sources, ultimately bolstering India's energy security and supply.

This agreement will come into effect upon its signing and will last for five years, automatically renewing thereafter on a five-year basis, unless either party provides a three-month written notice to terminate the understanding.

Guyana has recently emerged as a significant player in the oil and gas sector, marking its entry as the world's freshest oil producer. Notably, recent discoveries amounting to 11.2 billion barrels of oil equivalent represent a substantial share of global oil and gas discoveries.

Predictions from the OPEC World Oil Outlook 2022 anticipate a considerable increase in production for Guyana, with liquid supplies estimated to surge from 0.1 million barrels per day in 2021 to 0.9 mb/d in 2027.

In parallel, India stands as the world's third-largest energy consumer, the third-largest consumer of oil, the fourth-largest refiner, and the fastest-growing major economy. Its energy needs are on the rise, as highlighted by reports from the BP Statistical Review of World Energy 2022.

Projections from BP Energy Outlook and the International Energy Agency indicate India's energy demand growing at approximately 3 percent annually until 2040, a rate significantly higher than the global average of 1 percent. Additionally, India is expected to contribute to about 25-28 percent of the global energy demand growth between 2020 and 2040.

In a bid to strengthen energy access, availability, and affordability for its citizens and ensure the country's energy security, India is actively seeking to establish new alliances within the hydrocarbon sector. This includes diversifying crude oil sources and acquiring valuable overseas assets.

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