India's crude deal with Argentina signals interest to tap new, non-OPEC producers

India's first crude import deal with Argentina in eight years is set to pave the way for more purchases from the South American nation, as both countries intensify talks to boost energy ties, with New Delhi increasingly eyeing new and non-OPEC suppliers to expand its sourcing network.

Indian Petroleum Minister Hardeep Singh Puri recently held talks with an Argentine delegation to explore opportunities in oil and beyond. This coincided with state-run Bharat Petroleum Corp. Ltd. receiving 700,000 barrels of Medanito, a light sweet crude grade from Argentina, adding another emerging producer to its growing supplier list.

"BPCL's purchase of Medanito crude from Argentina appears to be a part of crude rebalancing efforts undertaken by several Indian refineries in response to higher volatility due to the increased Russian sanctions," said Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights.

Before the BPCL deal, India last bought crude oil from Argentina in 2018, when it received 760,000 barrels from the South American supplier, S&P Global Commodities at Sea data showed.

Platts, part of Commodity Insights, assessed Argentina's light sweet Medanito crude at $66.42/b on March 6, inching up 3 cents/b, or 0.05%, day over day, on an FOB basis. It also stood at a discount of $2.50/b to the Latin American Brent Futures strip.

Expanding the network

In a recent interview with Platts, Puri said non-OPEC suppliers such as the US, Canada, Guyana and Russia would increasingly have a larger presence in India's crude oil basket for the foreseeable future.

"I have held discussions with the delegation from Argentina recently. There are a lot of new suppliers who are keen to supply to us. So, availability is not a problem at all," Puri said.

The EIA estimates that Vaca Muerta shale formation, located mainly in Argentina's Neuquén province, has 308 Tcf of technically recoverable shale gas resources and 16 billion barrels of technically recoverable shale oil and condensate resources.

Vaca Muerta, in northern Patagonia, is driving the country's oil and gas production growth. Argentina's oil production rose 11.5% year over year to 757,100 b/d in January, the highest in 23 years, while gas output increased 11.9% to 138.5 million cu m/d over the same period, according to the National Energy Secretariat.

Over the same period, Vaca Muerta's oil production climbed 27.5% to 433,100 b/d and gas grew 4.7% to 62 million cu m/d, the secretariat data showed.

"Not only to India, but there will be prospects for more oil from Argentina to other Asian destinations too. They are ramping up production and infrastructure, which is good news for a lot of Asian buyers," said one oil trading source.

Competition with US crude

Analysts and refiners added that the comparable quality of Medanito crude to the common US crude grade may pose some challenges to its adoption by Indian refiners, but it is too early to draw conclusions.

"Indian refiners by now know how to adapt to US crude, but for a long time, they have not used crude from Argentina. But with the complexity of many of the refiners at very high levels, it's not going to be a big challenge," said one Indian refining source.

According to Ranjan, "Given the pressure of reciprocal tariffs by the US under the Trump administration, we expect that Indian refiners will likely prioritize fulfilling their light-sweet crude intake quotas with US crude, unless there is a significant price advantage."

India's appetite for US crude showed signs of revival in early 2025 after a prolonged period of sluggish inflows -- a trend likely to continue as renewed energy diplomacy between New Delhi and Washington, coupled with fresh sanctions on Russia, takes center stage.

India imported 232,342 b/d of US crude in January and 76,467 b/d in February, compared with an average of 151,872 b/d in 2024, CAS data showed.

India and Argentina are also exploring collaboration in sectors other than oil.

Argentina's YPF earlier this year signed a memorandum of understanding with Indian companies -- state-run Oil and Natural Gas Corp. and GAIL -- to explore possibilities for exporting up to a combined 10 million mt/year of LNG to these buyers, a key to developing the huge resources in the Vaca Muerta shale play.

The Indian companies will also work with YPF in the areas of developing lithium and other critical minerals, YPF said.