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US shale cannot compensate for Iranian oil

After ending the waiver period for sanctions on oil imports from Iran, the US has been trying to export more of its shale oil to India. But India, which is looking for alternative sources to supplement the shortage, is not comfortable with the idea and could in fact cut imports of shale gas. India has a commitment to import oil & gas worth around US$ 5 billion per annum from the US.

US shale will be expensive to process for Indian refineries, thereby increasing prices of the end-product and making it economically unviable. Composition and properties of shale oil are not the same as crude, and processing it requires a recalibration of refineries. IOC imported around 3.8 million tonnes of shale oil from the US in 2018-19. But very few refineries, like the IOC refinery in Paradip, have the capability to process shale oil.    

Iran as the third largest source of crude oil for India in 2018-19, accounting for 10% of imports. India was hoping for an extension of the waiver or Significant Reduction Exceptions (SREs) that it had been given in November. Unless India is able to find new sources at competitive prices quickly, the loss of oil from Iran is expected to significantly increase costs of petrol and diesel for end consumers.