(Photo : BT Creative)

Prime Minister Narendra Modi embarked on a three-nation tour to Nigeria, Brazil, and Guyana on Friday, aiming to strengthen India's energy security and expand trade ties in crude oil.

Modi will be in Nigeria from November 16-17, before attending the annual G20 Leaders' Summit in Brazil for two days. He will then visit Guyana from November 19 to 21.

This marks the first visit by an Indian Prime Minister to Nigeria in 17 years and to Guyana since 1996, both of which are rapidly growing their petroleum production.

Nigeria's Oil Reforms and Its Growing Role in India's Energy Strategy

Nigeria, the largest oil producer in Africa, has made significant reforms to its petroleum industry, which had long been hindered by corruption and inefficiencies. These reforms, along with the launch of the Dangote refinery in 2023, have led to a substantial increase in production. The refinery, owned by Aliko Dangote, Africa's wealthiest individual, is now the seventh-largest in the world by capacity. As a result, Nigeria's oil output has risen to 1.8 million barrels per day (bpd), based on official figures.

"Nigeria has no direct flight or ship connectivity and it has no Indian banks," says Mahesh Sachdev, who served as India's high commissioner there for five years (2008-13). "The imagery associated with the country has made it difficult to generate interest there. Hence, the focus of Indian stakeholders in business remains limited to countries which are more developed than us."

However, Nigeria's potential cannot be ignored. The African nation has immense potential to become an important oil producer. India imported $1.53 billion worth of Nigerian crude in the April-August period of FY25, making Nigeria its eighth-largest source of oil, a slight decline from the $3.4 billion imported in FY24 when it was the seventh-largest supplier. Nigeria exported an average of 0.8 million bpd until July 2024 and is expected to expand exports further in coming years.

A petroleum ministry official stated that Nigerian crude has been essential for Indian oil companies in meeting demand and maintaining stable supply schedules over the past two years. While the import of discounted Russian crude has lowered average costs, fluctuations in global oil supply have highlighted the importance of reliable partnerships, with Nigeria playing a key role in this regard.

Nigeria has several other ties to India: bilateral trade between the two countries stands at $15 billion, and over 200 Indian companies have invested more than $27 billion across various sectors, including infrastructure. These companies are the second-largest employers of locals in Nigeria. Additionally, India's $400 million aid program, along with 500 scholarships provided annually and the training of 27,500 Nigerians in various fields, further strengthen the relationship.

Guyana's Emerging Role in India's Energy Diversification Strategy

In addition to Nigeria, Guyana plays a key role in India's energy diversification strategy. With an estimated 11.2 billion oil-equivalent barrels - representing 18% of global oil and gas discoveries and 32% of discovered oil - the South American country is quickly becoming a significant player. Despite its smaller size, Guyana has the potential to impact global energy markets. India imported $148 million worth of Guyanese crude in 2021-22. Guyana began oil production in December 2019.

Key Areas for Future Partnership

• Mining: Nigeria's abundant natural resources present opportunities for Indian expertise and investment to enhance the sector.
• Infrastructure: India's infrastructure development capabilities could play a pivotal role in transforming Nigeria's growth trajectory.
• Defence: Strengthening defence cooperation, particularly in areas like defence production and counter-terrorism, will be a key focus.
• Energy: Expanding energy partnerships can mutually benefit both nations by leveraging Nigeria's oil resources and addressing India's increasing energy needs.