India likely to push for dropping ‘Asian premium’ on oil prices

Image for representation purpose only.

Image for representation purpose only.

India is likely to lobby heavily for an end to the discriminatory “Asian premium” on oil prices and a “responsible” price mechanism, as it prepares to host a major conference for oil producing and consuming countries.

Addressing a curtain raiser for diplomats of countries that are expected to send delegations for the International Energy Forum (IEF) April 10-12, Petroleum Minister Dharmendra Pradhan said India would become a “happening point” for energy after the conference, which would be close on the heels of the International Solar Alliance (ISA). Mr. Pradhan promised a “new roadmap” for the world during the IEF, especially given the oil price fluctuations.

“We are all concerned about having a responsible price mechanism. We don’t expect low oil prices anymore, and we know what are the limitations and challenges for the long-run: a decrease in exploration and production activities, low capital expenditure environment,” Mr. Pradhan said.

‘Affordable prices’

He added it was inevitable that low oil prices, as seen in recent years, would cause a “crisis”. “Simultaneously we must take care of the interests and aspirations of consumers in India and we need affordable energy prices,” he said. Key Oil Producing and Exporting Countries (OPEC) including Saudi Arabia, and Iran’s petroleum ministers, will attend the conference said officials handling the programme. The IEF represents 90% of world consumption and production of oil and gas. All 92 member countries of the IEF are expected to send delegations, with about 40 participating at a ministerial level.

Since 2015, Mr. Pradhan has made repeated demands to the IEF countries to remove what is called the “Asian premium” on prices that was pioneered by Saudi Arabia, which distinguished consumers in Asia from the U.S. and European countries. However, the demands have met with little success and the issue is expected to be raised on the sidelines of the event, if not during the conference with Saudi Arabia and others.

With Iran, whose Energy Minister Bijan Zanganeh has confirmed attendance, the government is expected to raise its raised $11-billion bid for Iran’s Farzad-B oilfield, that Tehran has dodged for months.

“The Iranian Minister for Oil met our Minister in Delhi on February 17, and at that time he confirmed he would participate. Farzad-B is always an issue that we have been discussing, we discussed it in February as well,” a senior official said.

However, the overarching thrust of the IEF conference will be on moving away from fossil fuels, not on increasing consumption, said the official.

“The outcomes we would look for would revolve around the whole issue of transition: of moving to electric vehicles, or renewables or decarbonisation, which will affect the industry as a whole.”

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Printable version | Aug 20, 2022 2:39:53 am |