Oil producing countries’ proposal to extend production cut could end up creating possibility of under investment in the sector and leaving consumers’ demand unmin the long run, Oil Minister Dharmendra Pradhan has said.
“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,, an Oil Ministry statement quoted Pradhan as having told representatives of oil cartel OPEC in Vienna.
Pradhan co-chaired the 2nd India-OPEC Institutional Dialogue at the OPEC headquarters two days ahead of the OPEC Ministerial meeting scheduled from May 25. Pradhan highlighted the importance of India – OPEC engagement and discussed the effects of the production cut of 1.8 million barrels per day by OPEC and non-OPEC countries on the global oil market volatility, according to the official statement.
Oil prices have risen 11% since May 9 on media reports that a pledge by OPEC and other producers, including Russia, to cut supplies by 1.8 mbpd would be extended to March 2018, instead of covering just the first half of this year. There have also been reports of producers considering deepening the production cut.
Pradhan stressed that the OPEC should work towards “Responsible Pricing,, which would allow India to provide energy to the common and marginalised 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.
Pradhan said India’s energy mix was undergoing major changes with renewables becoming important. “The oil Industry is at a delicate cross road and higher crude prices will give a further push to renewables,, he said.
About 86% of India’s import of crude oil, 70% of natural gas, 95% of LPG are from OPEC countries. Andy Levitre JerseyShare This