‘Buy, baby, buy’: Energy connect set for big boost

Modi and Trump emphasized energy collaboration, aiming to boost US oil exports to India and reform nuclear laws for US technology in a recent meeting.

Nothing symbolised the importance of energy in the talks between Prime Minister Narendra Modi and US President Donald Trump than the seating in the Oval Office on Thursday evening.

‘Buy, baby, buy’: Energy connect set for big boost

On the left of Trump were three cabinet members. Among them, two dealt with energy: secretary of interior and chair of Trump’s energy council, Doug Burgum; and secretary of energy, Chris Wright. And nothing symbolised the intertwined connections of the energy barons and the energy policy world in Trump world than Wright, who served as CEO of North America’s second largest hydraulic fracking company and on board of a small modular reactor company before his current role.

If there was any doubt what it all meant, Trump made it clear at the press conference with Modi.

He complained about not having a level playing field on trade in India, claimed that the US can make up with the sale of oil and gas, spoke about an agreement on energy that would “restore the US as leading supplier of oil and gas” to India, and mentioned India’s intent to reform laws to welcome US nuclear technology -- all of which would bring billions to US companies.

The joint statement followed the script, with the two leaders underscoring “the importance of US-India collaboration to ensure energy affordability, reliability, and availability and stable energy markets”, given the American and Indian roles as a leading producer and consumer.

The commitments in the joint statement spanned oil, gas, and nuclear power. The US pledged support for India’s full International Energy Agency (IEA) membership. On nuclear energy, India announced plans to amend its Atomic Energy Act and Civil Liability for Nuclear Damage Act, paving the way for US-designed nuclear reactors with technology transfer. Both indicated collaboration on advanced small modular reactors and expanded cooperation in strategic petroleum reserves. The two nations said they will enhance hydrocarbon trade and infrastructure investments.

India, which imports more than 87% of crude oil it processes, is looking for reliable and economical energy sources as the Russian supplies is hit by the US’ early January move imposing sanctions against Russian firms Gazprom Neft and Surgutneftegaz, along with 183 vessels involved shipping Russian crude. The US could be an alternative as India’s dependence on Russia had incresed multifold in recent years because it was offering huge discounts, an official said.

Russia, which constituted less than 1% of India’s total crude imports (about 0.56 million tonnes in 2021-22) before it declared a war with Ukraine in February 2022, became the second biggest supplier after Iraq in 2022-23 at $31.04 billion due to massive discounts.

Hours later, posting a clip of the speech, Trump’s national security advisor Michael Waltz posted on X that “Drill, baby, Drill” was equal to “Buy, baby, Buy”, with flags of the US and India.

‘Buy baby, buy’Both leaders emphasised the importance of enhancing the production of hydrocarbons "to ensure better global energy prices and secure affordable and reliable energy access for their citizens”.

“The leaders also underscored the value of strategic petroleum reserves to preserve economic stability during crises and resolved to work with key partners to expand strategic oil reserve arrangements. In this context, the US side affirmed its firm support for India to join the International Energy Agency as a full member,” the statement said.

Modi and Trump agreed to increase energy trade, to both establish energy security and establish the US as a “leading supplier of crude oil and petroleum products and liquified natural gas to India”. In particular, they focused on natural gas, ethane and petroleum products as part of efforts to ensure supply diversification and energy security. “The leaders committed to enhance investments, particularly in oil and gas infrastructure, and facilitate greater cooperation between the energy companies of the two countries”.

At a press conference before getting on the PM’s flight to Delhi, foreign secretary Vikram Misri said that India had imported close to $15 billion worth of American energy products last year, and this could go up to $25 billion “in the near future”. Misri said that the discussions had focused considerably on energy and this would contribute in reducing the US trade deficit with India.

The nuclear storyA story that began two decades ago with the seeds of the civil nuclear deal has finally started to move to its next chapter. The nuclear deal was followed by a liability act in Parliament that imposed liability in the case of an accident on not just the operator but the supplier, which went against general international practice. Nuclear companies were reluctant to invest and the geopolitical win didn’t translate into energy wins. The fact that Atomic Energy Act makes nuclear energy a government monopoly further restricted the market.

But with finance minister Nirmala Sitharaman’s recent budget announcement outlining the intent to amend the two legislations, the doors have opened up.

The statement acknowledged this and said, “Both sides welcomed the recent Budget announcement by Government of India to take up amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act (CLNDA) for nuclear reactors, and further decided to establish bilateral arrangements in accordance with CLNDA, that would address the issue of civil liability and facilitate the collaboration of Indian and U.S. industry in the production and deployment of nuclear reactors.”

This path forward, the statement said, will unlock plans “to build large US-designed reactors and enable collaboration to develop, deploy and scale up nuclear power generation with advanced small modular reactors”.

At the presser, Trump said, “India is also reforming its laws to welcome US nuclear technology, which is at the highest level, into the Indian market. This will bring safe, clean, and affordable electricity to millions of Indians and tens of billions of dollars to the U.S. civilian nuclear industry in India.”

Commenting on the significance of the energy dimension of the statement, Shreerupa Mitra, an energy expert who has advised both government and businesses, said, “Increasing energy imports from the United States is the lowest-hanging fruit and the most straightforward way to address the trade imbalance. Even during the Trump 1.0 administration, expanding energy trade was seen as the easiest ways to address the deficit quandary. It is a mutually beneficial solution as India seeks to diversify its supply with stringent US sanctions on Russia imposed by the Biden administration. Saudi oil comes at a premium, and OPEC, with its considerable spare capacity, has a long history of price manipulation.”

She added that India already imported roughly $20 billion worth of American energy products, including oil and solid commercial contracts.

“Expanding its strategic petroleum reserves, of which India currently has three, would provide a crucial buffer against geopolitical shocks and supply disruptions. Moreover, India is the largest buyer of U.S. liquefied natural gas, and with American production forecasts remaining robust, deepening that partnership is both an economically sound and strategically prudent move.”