India plans refiner’s joint oil deals to cut import bill amid its worst power crisis in years

The companies can form joint strategies and they can even go for joint negotiations wherever possible," Kapoor, the top bureaucrat in the petroleum ministry, told Reuters.

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India plans refiner’s joint oil deals to cut import bill amid its worst power crisis in years

India is forming a group that brings together state-run and private refiners to seek better crude import deals, oil secretary Tarun Kapoor said on Tuesday, as the country grapples with soaring oil prices. Initially, the group of refiners will meet once a fortnight and exchange ideas on crude purchases.

“The companies can form joint strategies and they can even go for joint negotiations wherever possible,” Kapoor, the top bureaucrat in the petroleum ministry, told Reuters.

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The world’s third-largest oil importer and consumer, India depends on imports for about 85% of its crude and buys most of it from Middle East producers, and is often vulnerable to global supply and price shocks. Iraq has been India’s top supplier for the past few years, staying ahead of Saudi Arabia, which has been producing less than its capacity to meet OPEC supply curb commitments.

India is reducing the share of OPEC oil in its crude mix as refiners, that have invested billions of dollars in refinery upgrades, are tapping cheaper oil. Indian state refiners have already jointly negotiated some crude oil purchases. State refiners have also been asked to look for oil supplies from outside the Middle East region.

To date, the one effort at a joint negotiation bringing together not only state-run but private refiners resulted in a deal that secured supply of Iranian oil at a deep discount.

India’s trade deficit in September surged to a record $22.6 billion, its highest in at least 14 years, driven by expensive imports. With local gasoline and gas oil prices rising to a record high amid India’s worst power crisis in years, the nation wants to redouble its efforts to buy wisely.

Kapoor said the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, should raise production to bring down global oil prices.

“OPEC+ should realize that this is not the right approach, they must step up production. If the demand is going up and you are not increasing production, you are trying to create a gap,” Kapoor stated.

OPEC+ producers recently agreed to stick to a plan to increase November output by 400,000 barrels per day (bpd) as it looks to phase out output curbs of 5.8 million bpd over time.

Kapoor said rising oil prices would prompt oil consumers to “seriously start thinking of shifting to other forms or curtail their demand for OPEC oil somehow. These kinds of prices are not sustainable.”

India is already reducing the share of OPEC oil in its crude mix as refiners, that have invested billions of dollars in refinery upgrades, are tapping cheaper oil.

High oil prices are spurring investment in upstream activities, which could lead to higher production from regions other than the Gulf, Kapoor noted.

Sources: The Hindu, Business Standard, BW Online Bureau

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India plans refiner’s joint oil deals to cut import bill amid its worst power crisis in years
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The companies can form joint strategies and they can even go for joint negotiations wherever possible," Kapoor, the top bureaucrat in the petroleum ministry, told Reuters.
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THE POLICY TIMES
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