New Delhi: Battling a severe slowdown, India on Tuesday implored Organization of the Petroleum Exporting Countries (Opec) to not affect deeper crude oil production cuts.
In meeting between petroleum and natural gas minister Dharmendra Pradhan and Mohammad Sanusi Barkindo, secretary general, Opec, India also pitched for better commercial terms for crude oil imports.
Pradhan requested for a reduction in official selling price, extension of credit period from existing 30 days to 90 days from bill of lading, freight discount and open credit based on credit worthiness of Indian state run refineries such as Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd.
With Opec accounting for 80% of India’s crude oil imports, any production cut by the so called Opec plus arrangement may compromise India’s energy security efforts in the short run.
Russia and Saudi Arabia have decided to extend the crude oil supply cut. The extension of supply cuts will have wide-ranging impact on energy markets, given that Opec accounts for around 40% of global production.
This comes in the backdrop of 14 September drone attacks on Saudi Arabian Oil Company or Saudi Aramco’s facilities that caused the biggest ever-disruption in global crude oil supplies. With a fifth of the global oil supplies passing through the strategic Strait of Hormuz, growing hostilities in the Persian Gulf have raised India’ concerns which is the world’s third largest crude oil importer.
New Delhi has been trying to buffer its consumers from fluctuations in global prices. US ambassador to India Kenneth Juster on Monday also cautioned India against a range of issues including “managing the rise of China" and “securing energy supplies."
“We hope that in the current geopolitical situation, OPEC does not exercise greater production cuts. We sincerely believe that crude prices should be left to market forces of demand and supply.We have been consistently advocating maintaining an optimal balance between the producers and consumers for responsible pricing, which balances the interests of both the producer and consumer," Pradhan said.
This comes at a time when India has pitched the International Solar Alliance (ISA) as a counterweight to Opec, which will be holding its second general assembly in New Delhi from 30 October—2 November.
“In fact, Indian companies have started exploring alternate sources for crude oil, to ensure that our import basket is widely spread out, to counter any eventuality of sudden supply shortage," Pradhan said.
India, which is one of the major Opec consumers, has called for a global consensus on “responsible pricing". Also, India has consistently been pitching for a price and terms correction on the so-called Asian premium. With most Asian countries being primarily dependent on West Asia to meet their energy needs, customers from the continent are seen paying the Asian premium as compared to the prices paid by the US or the European Union.
Pradhan also thanked Opec and Abu Dhabi National Oil Co (Adnoc), the state-run oil company of the United Arab Emirates (UAE) for making up for the deficit due to loss of Iranian crude oil. Adnoc is the only one to partner with India on its crude oil reserve programme till date for filling up one of the two strategic petroleum reserve (SPR) caverns built by Indian Strategic Petroleum Reserve Ltd (ISPRL) at Mangalore.