India scrambles for more crude in wake of Iraq-Iran oil cutoff

With its two main oil suppliers seemingly bent on maximum damage to each other's oil installations, India is scrambling to locate and tap new sources of crude oil and petroleum products to keep its economy moving.

The disruption of oil supplies from Iran and Iraq, which together provide India with more than 70 percent of its imported oil, have left the Indian subcontinent's major power with only about three weeks' supply of crude and petroleum products.

As a result, the country is expected to make a strong pitch to the Soviets for crude oil during this week's state visit to the USSR by Indian president Neelam Sanjiva Reddy. Mr. Reddy has taken along Indian Oil Minister Virendra Patil, who already has approached the Soviet ambassador to india for extra oil.

The Iran-Iraq conflict also is heightening pressures on Prime Minister indira Gandhi's government to resolve a protracted mass protest in the troubled northeastern state of Assam that has cut off a third of india's own domestic oil production.

Student-led protesters demanding the explusion of "foreigners" -- mostly immigrants from Bangladesh -- from the state have been blockading the flow of Assam's crude oil to the rest of the country since December.

The blockade has denied the country about 4 million tons of indigenous crude and petroleum products, has shut down several refineries, and has cost the country $125 million a month for oil imports to make up the loss.

Talks between the government and protest leaders have yet to break a deadlock over the issue of a cutoff year for the disenfranchisement and deportation of foreign settlers, who the Assamese say have threatened their state's cultural and ethnic identiy.

Last week, Mrs. Gandhi's governemnt decreed as sweeping new preventive detention ordinance that enables both the cnetral and state governments to jail without trial persons seen as threats to the country's security, public order, or the supply of essential goods and services.

Many Indians are now wondering if and when Mrs. Gandhi will use the tough new law to break the blockade and get the Assam oil moving. The political risk would be formidable, observers note, since a crackdown would probably breath new life into the Assamese protest, the largest mass movement directed at New delhi since India's own drive for independence from the British empire.

Although officials are assuring the public that India's immediate oil position is comfortable, articles about possible gas rationing are surfacing in the Indian press, and motorists are keeping their gas tanks filled -- at $3 a gallon -- just in case.

India maintains friendly relations with both Iran and Iraq. Between them, the countries have contracted to supply 11 million of the 17 million tons of crude oil India is importing this year. Although most of it has arrived at Indian ports, India's immediate problem is the 3.5 million tons yet to be delivered.

The mutual destruction of these countries' oil installations has left officials worried about whether either will be in a position to supply the remaining crude. As a precaution, the government has authorized the purchase of 300,000 tons from the spot market. It also has started sounding out other oil exporters about the possibility of making up the shortfall.

But the economy of the world's second most populous nation is already staggering under an oil import bill of $6.25 billion a year, which eats up an estimated 70 percent of India's export earnings.

Unless the Soviet Union has oil to spare at reasonable rates, officials fear, higher international market prices for oil in the wake of the Iran-Iraq war will send India's oil bills soaring even higher and pose yet another setback for the economy.