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Pradhan moots Asian buyers forum to counter OPEC clout

The call comes following a decision to move towards a gas-based economy

Minister of State for Petroleum and Natural Gas Dharmendra Pradhan has mooted the idea of a large Asian LNG buyers forum to negotiate more equitable trade deals and balance the influence of the Organisation of Petroleum Exporting Countries (OPEC).

This assumes significance in light of the ongoing increase in oil prices resulting in an adverse impact on the Indian exchequer and the government’s commitment to move towards a gas-based economy.

“The world needs even greater co-operation among countries on gas technologies such as shale and gas hydrates,” Mr. Pradhan said. He was speaking at a joint forum organised by the International Energy Forum and the International Gas Union.

“Similarly, a number of large Asian LNG buyers, including India, could benefit by joining hands and thereby, possibly, bring in more equitable trade deals,” he said.

No unity

“This (the idea of buyers’ forum) is something India has been exploring for some time,” K. Ravichandran, Senior Vice President and Co-Head, Corporate Sector Rating, ICRA said.

“Today a large number of LNG deals are linked to oil prices. Only geographies with LNG hubs have prices lower than the oil-linked prices. The view is that Asian LNG buyers pay higher rates since there is no LNG hub in Asia and there is no unity among consumers. That is what India is trying to capitalise on.”

However, not all experts are convinced that cooperation between LNG buyers will yield any significant results since the market for the gas is already dominated by the buyers.

“We have seen good days for buyers in the international gas market and they were able to get good terms,” said Deepak Mahurkar, Leader, Oil and Gas Industry for PwC India.

“Buyers like India and Japan tried to join forces a couple of years ago. The mechanisms put in place met with little success,” Mr. Mahurkar said.

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Printable version | Aug 3, 2020 6:04:16 PM | https://www.thehindu.com/business/Pradhan-moots-Asian-buyers-forum-to-counter-OPEC-clout/article16768804.ece

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