-
Opec rationing a cause of concern for India, says Dharmendra Pradhan
The move by the Organisation of Petroleum Exporting Countries (Opec) to cut crude oil production should not be one-sided and the interest of consumer nations should be taken into account for whom ‘rationing will be a cause of concern’, India’s petroleum minister Dharmendra Pradhan said on Tuesday.
The oil cartel has decided to cut production by close to 1.2 million barrels per day (mbpd) following a drop in international crude oil prices in the last one month. “The cut in oil production should not be one-sided. The demand or the requirement of the consuming nations should be taken into account. Rationing of any type is a cause of concern for consumers like us,” Pradhan said on the sidelines of a KPMG summit in Delhi.
The OPEC decision is likely to push Brent crude oil prices back to $70 a barrel mark according to industry experts. When asked about the Indian impact on the exit of Qatar from OPEC to focus more on production of natural gas, Pradhan said it would not be having any impact on India as it has diversified crude oil basket. Qatar’s exit was also triggered by the economic boycott of the country from June 2017 by other OPEC members like Saudi Arabia, accusing that the nation was in support terrorism.
Pradhan added the ministry of petroleum was in the process of moving the Union Cabinet with a proposal to set up a gas hub that will bring in a new hub-based pricing for natural gas in the country. “The global investor industry is today keenly looking at Indian energy sector as an attractive investment destination,” he said. Brent crude was seen at $60.36 a barrel at one point on Tuesday. If prices go up, that is also likely to have an impact on the prices of petrol and diesel too in domestic market, in addition to the pressure on the government over the increase in crude oil import bill.
The share of imported crude oil in India’s overall crude oil requirement has increased to 87.5 per cent during the first six months of the current financial year from 84.7 per cent during the financial year 2014-15. India’s crude oil import bill is expected to be $124.73 billion during 2018-19, as compared to $87 billion during the previous financial year. For every one dollar increase in crude oil prices, India’s import bill is expected to increase by Rs 61.58 billion, while a change of Rs 1 on exchange versus dollar will increase it by Rs 66.39 billion.
Addressing the summit, Pradhan further said most transformative reform in the exploration and production sector is moving to a revenue-sharing model and opening the entire sedimentary basin to investors through open acreage licensing. “Various relaxations have been provided under the existing production sharing contracts to provided adequate flexibility to operators to enable early development of discoveries,” he added.
Share This
