India asks Opec for discount in oil prices
New Delhi: Emphasising that the oil industry is at a “delicate cross road” and higher crude oil prices will tilt energy consumption more towards renewable sources, India has demanded a discount from the Organization of the Petroleum Exporting Countries (Opec), according to an oil ministry statement on Monday.
Petroleum minister Dharmendra Pradhan’s remarks came during the second India-Opec Institutional Dialogue at Vienna, which took place just two days prior to the Opec ministerial meeting starting 25 May. Opec is a grouping of 13 oil producing nations.
According to an official statement from the petroleum ministry, Pradhan had a one-on-one meeting with Opec’s secretary general Mohammad Sanusi Barkindo where he discussed bilateral issues at a delegation level dialogue. They discussed India-Opec engagement and the effects of the production cut of 1.8 million barrels a day by Opec and non-Opec countries on the global oil market volatility.
At the meeting, Pradhan stressed said that India had been and continued to be a reliable customer of Opec countries, the only big economy where the demand for crude oil continues to rise each year.
He also said that India provided timely payments and honoured all its contractual commitments and demanded due acknowledgment through a discount in prices for the large volumes that India imports.
About 86% of India’s imports of crude oil, 70% of natural gas, and 95% of LPG are from Opec countries.
The petroleum minister stated that in today’s oversupplied market, it was important for producers to understand the perspective of consumers and the demand centres and the changes that have taken place in these demand centres. He stressed on the fact that while the security of supplies was important for consuming countries, the security of demand was equally important for producers.
Pradhan also said that Opec should work towards “responsible pricing” which is important for India for socio-economic and developmental reasons.
“It would allow India to provide energy to the common and marginalized people who have been deprived of access to energy so far. Higher crude prices would retard growth rate which will result in slowing down the demand of crude oil,” he said.
He highlighted that the energy mix in India was undergoing major changes with renewables coming in a big way and pricing of solar energy coming down to 4 cents per unit.
“There is also a shift in focus to solar, wind, biomass, electric vehicles, hybrid cars,” said Pradhan while emphasizing that the “oil industry is at a delicate cross road and higher crude prices will give a further push to renewable”.
On the proposed plan of continued production cut by Opec and non-Opec countries, Pradhan said that, “energy security was a full circle”.
“While the production cut is an attempt to arrest the slide in prices, however, it also has an inherent chance of under-investment and consumer’s needs not being met in the long run, which is not in the interest of a balanced and healthy global oil and gas market,” he added.
The petroleum minister was accompanied by secretary of the petroleum ministry, other senior officials and Vienna and CEOs of seven large refiners of India both from public and private sector including Indian Oil Corp., Hindustan Petroleum Corp., Bharat Petroleum Corp., Mangalore Refineries and Petrochemicals Ltd, HPCL-Mittal Energy Ltd, Reliance Industries Ltd, and Essar Group.
“It was the first time that both public sector and private refiners from India were together to present their common issues, concerns and demands before the OPEC,” the statement said.