India has approved the signing of a five-year memorandum of understanding (MoU) with Guyana to cooperate in the hydrocarbon sector.

This move comes as the South Asian nation looks to diversify its oil import sources.

The proposed agreement will cover various areas of cooperation, including the sourcing of crude oil from the South American nation, the participation of Indian companies in its exploration and production sectors, and cooperation in crude oil refining.

The MoU, which will have an initial duration of five years, also includes a provision for automatic renewal if both countries agree.

Notably, this agreement has been in the works for more than two years, with discussions between the two countries ongoing. Last year, Guyana turned down India’s request for discounted crude oil purchases during trade discussions.