Harish Srinivasan asked: Growth of ISIS poses a severe threat to oil supplies from Iraq. What should be India's approach to ensure energy supplies from Iraq?

Shebonti Ray Dadwal replies: ISIS has lost control over major oil fields in Iraq since mid-2015, and although it still controls some parts of Iraq, the oil trade in eastern Syria is now one of the only means it can make money from oil. The main oil-producing regions of Iraq are still under the control of Baghdad and despite security and financial problems the crude production has grown substantially over the last five years, reaching 4.4 mbd in the third quarter of 2015 as against 2 mbd earlier. Hence, as of now and also most likely in the future, Iraqi oil exports will continue.

The growth in production is partly due to the Iraqi Government’s attempt to generate more income, which is needed for reconstruction as well as to contain ISIS. The recent low price has also added pressure to an already severely constrained economy.

Currently, Iraq is India’s second largest crude oil supplier with 17.01 million tonnes and, in fact, for a while in mid-2015 had replaced Saudi Arabia as India’s top crude supplier. The Saudi oil supplies to India in 2015 stood at 19.56 million tonnes.

Posted on January 06, 2016