Crude oil reserve planned

By Sushma Ramachandran

NEW DELHI, SEPT. 21. In the light of the impending conflict in the neighbouring region, the Centre is considering a long-pending proposal for establishing strategic reserves of crude oil and petroleum products. Currently, the country has two months' inventories of oil and products but has not yet implemented any plan for creating a strategic reserve like in the U.S.

The Petroleum Minister, Mr. Ram Naik, said the existing level of inventories could be considered a ``strategic'' stockpile but added that a proposal for a formal reserve was being discussed. He said he may visit the U.S. to study their reserves before finalising the plan.

Mr. Naik, who spoke to newspersons after returning from a four- day regional meeting of the World Energy Congress said the Organisation of Oil Exporting Countries (OPEC) had given an assurance that it would not only maintain oil supplies but also try to keep prices stable at around $ 25 a barrel.

Speaking in the context of the U.S. decision to attack terrorist bases in Afghanistan, he said the current world prices had slumped in anticipation of a further economic slowdown in the U.S. He said Brent crude was being quoted below $ 26 on Thursday while dismissing suggestions about a possible rise in domestic oil prices for the time being.

Mr. Naik said he had appealed to the OPEC to ensure that artificial scarcity of oil was not created and prices were not jacked up on the pretext of war and added that the meeting was the first effort to bring about cooperation among Asian countries which comprised the largest exporters of crude oil such as the West Asian countries and the largest consumers such as Japan, China and India.

He said the Saudi Petroleum Minister, Dr. Ali Naimi, had assured the conference about the continuity as well as the stability of oil prices from OPEC. In a meeting with Mr. Naik, he said Saudi Arabia believed in long-term contracts and discouraged spot market sales which result in ``gambling''. The oil supply chain would be maintained despite the disturbed condition after the attacks on the U.S. He said India's proposal for extending the credit period for crude supplies to developing nations was being considered by his Government.

In turn, Mr. Naik said India had accepted the Saudi proposal to set up an ``International Energy Forum'' to institutionalise the dialogue between oil-producing and consuming countries.

In separate meetings with the Chinese national oil companies, it was noted that India and China could cooperate with each other in exploration and production and also in acquiring equity oil in foreign countries. Besides, it was found they could tie up in bidding for service contracts in other countries capitalising on their large pool of trained manpower and strength in software technology.

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