India for Asian consumers’ front as oil prices soar1 min read . Updated: 26 Apr 2018, 09:39 PM IST
India's move also signals an impending change in the global energy architecture, with buyers at the centre of oil majors' future growth plans
New Delhi: India has proposed a consumers’ collective comprising major energy buyers—China, India, Japan and South Korea. The move comes in the backdrop of rising global oil prices and assumes importance given that China and India are the world’s second and third largest oil importers, respectively.
Japan and South Korea are placed at the fourth and fifth positions, respectively. The move also signals an impending change in the global energy architecture, with buyers at the centre of oil majors’ future growth plans.
“I see a bigger cooperation between these four big economies of Asia. Not only India and China but Japan and Korea as well," petroleum and natural gas minister Dharmendra Pradhan said on the sidelines of a conference here.
The rally in oil prices is due to the Organization of the Petroleum Exporting Countries (Opec) and Russia cutting supplies. India has called for a global consensus on “responsible pricing." Also, falling production in Venezuela and geopolitical tensions, such as possible sanctions against Iran and escalating conflict in Syria, have contributed to the price spike.
“The price of Brent crude has soared to $73-74/bbl (barrel), their highest level since November 2014," rating agency Icra Ltd said in a report on Thursday.
With most Asian countries being primarily dependent on West Asia to meet their energy needs, customers from the continent are seen paying a so-called Asian premium owing to this dependence as compared to the prices paid by the US or the European Union. India has consistently pitched for a price and terms correction.
“India will try to create a network between these four economies. Why (should) the biggest consumers of the world pay more? Why should we be continuously paying more in the name of the Asian Premium?" added Pradhan. He said producers and consumers should have an equal say.
India has been trying to stitch together new alliances including the exploration of a joint front with China, which may include joint sourcing of energy supplies. The US may also collaborate with India on its crude oil reserve programme as part of a strategic energy partnership. “Everyday there is an upward trend, that is also impacting the Indian market," Pradhan said, referring to oil prices.