Addressing an OPEC seminar in the Austrian capital Vienna, India’s Oil Minister Dharmendra Pradhan said that the OPEC was not justifiable in asking Asian buyers to pay more to subsidise transportation cost to distant consumers. He also stressed upon improved trade terms with OPEC, such as selling oil without payment guarantee and extending credit period.
For decades, India and other Asian countries have paid up to $6 a barrel, which was more than the US or other European refiners, paid to the West Asian oil producers.
“There is a strong feeling that Asian countries like India should receive Asian dividend rather than paying Asian premium while making bulk purchase of crude. I will not hesitate to say that Asian premium was historically never justified and more so not justifiable in the changed market scenario where Asian countries are the major buyers,” he said.
At the same time, he also said that the crude prices must be high enough, as it will ensure a fair return for producers and attract investment in future production capacity. But if the prices are too high, people will opt for other fuels instead of oil.
India is currently the fourth largest petroleum consumer in the world. India imports about 78% of the crude oil, and about 85% of its crude import and 94% of the natural gas import come from OPEC countries.
India has one of the most cost effective yet modern and complex refining capacities. And if India receives crude oil at a reasonable price without paying Asian premiums, its refining margins will improve significantly.
India needs approximately $600 billion in energy sector from 2011 to 2030. Considering the huge demand, New Delhi has been keen on forming partnership with OPEC nations. Therefore, Mr Pradhan also invited OPEC member countries to invest in India’s energy sector, including refining, petrochemical, LNG and oil and gas exploration.
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