Amid rising prices, India gives OPEC a sharp message
Amid indications that India is looking at non-OPEC sources of crude such as the United States and China to beat down prices, oil minister Dharmendra Pradhan on Thursday met ambassadors from the cartel’s member-countries to deliver a sharp message: be “responsible” with oil pricing or lose market share.
Pradhan’s meeting with the envoys of OPEC (Organisation of Petroleum Exporting Countries) follows India’s talks with China on Monday for an oil alliance, during which one of the proposals on the table envisaged Indian refiners buying equity crude directly from Chinese companies with stake in overseas projects instead of the spot market.
Monday’s talks between Sanjiv Singh, head of IndianOil, India’s largest refiner and fuel retailer, and top executives of Chinese oil companies also looked at investing — either jointly or separately — in expanding US oil and gas export infrastructure to raise shipments to Asia as a counterbalance to OPEC, sources said.
These developments add to India’s negotiating strength as the world’s third-largest oil importer. Together with China, the two countries accounted for 17% of global oil consumption in 2017.
International Energy Agency sees the two fuelling half the global demand growth in the next five years, with India driving incremental demand growth through the next two decades.
US oil and gas is already flowing to India. The prospect of direct supplies from Chinese companies adds to India’s options and poses a challenge for OPEC.
The meeting with the envoys and the talks with China, thus, laid the ground for Pradhan to forcefully convey India’s message to OPEC energy ministers at the two-day OPEC International Seminar in Vienna next week.
The ministers are gathering on June 20 as they debate an exit plan for the 2016 production cut deal, one of the key factors for pushing up oil prices.
Another issue raised by Pradhan was the ‘Asian Premium’ — or a higher price — charged by West Asian oil exporters for shipments to Asian buyers, as opposed to Europe.