(Reuters) India, the world's third-largest crude consumer and importer, has approached Guyana's government about a possible long-term deal to buy the South American country's oil, a Guyanese official said.

India has expressed interest in buying one of the 1 million-barrel cargoes Guyana's government is entitled to in order to test the crude in its refineries, according to Guyana's Natural Resources Minister Vickram Bharrat. If the crude is compatible, the parties could begin talks on a long-term arrangement.

India's oil demand has risen by 25% in the last seven years, more than any other country, and officials there have pledged to use the country's position as a leading purchaser as a "weapon" in an effort to keep prices low.

New Delhi is already exercising its growing clout in the crude market. It viscerally opposed a decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to extend production cuts that have lifted the price of oil, and is seeking to diversify its purchases away from top producer Saudi Arabia.

State refiners plan to buy 36% less oil from Saudi Arabia in May than normal, sources told Reuters, and the country is now attempting to swap out Saudi supply with new origins like Guyana. read more

Private Indian refiner HPCL-Mittal Energy Ltd (HPME.BO) purchased India's first-ever cargo from Guyana this month, but the talks have taken place on a government-to-government basis. read more

"India is interested in taking Guyana's share of its crude, based on mutual agreements, as part of its crude source diversification across the world," said one source with knowledge of the talks, who spoke on the condition of anonymity.

The two parties are still negotiating pricing, said the person, adding that the crude would be processed by state-owned refineries in India.

Bharrat said pricing was the "most important" factor for Guyana in any potential deal.

"First and foremost is us getting the best price for our crude," he told Reuters in a telephone interview.

Guyana has become the world's newest energy hotspot after a consortium led by Exxon Mobil Corp (XOM.N) began to produce light crude at the offshore Stabroek block in late 2019.

But with no domestic refining nor state oil company, Guyana has relied on private companies like Hess Corp (HES.N) and Royal Dutch Shell PLC (RDSa.L) to market its share on a spot basis. President Irfaan Ali's government has relaunched a search for a long-term partner to market its share, but has not yet selected a firm. read more

Bharrat said the government planned to re-launch the search for a marketing firm "soon." He said there was no guarantee the government's next cargo - which he said is due in June but may be delayed due to mechanical issues that have reduced production levels - would go to India.

Long term oil export deals negotiated between governments have been common in some South American oil-exporting countries in recent decades. Venezuela and Ecuador, for example, have supplied large quantities of crude to China under such long-term deals.

Guyana and India have strong historical and cultural ties. A large portion of Guyana's population of around 750,000 is of Indian descent, and Ali's People's Progressive Party - which won parliamentary elections last year - is traditionally associated with the Indo-Guyanese population.