Dharmendra Pradhan calls on Opec to make oil affordable
21 June 2018
India, the world's third-biggest oil consumer, has called upon oil producing and exporting nations to price oil in a way that also helps consumers as the current policy of creating shortages to drive up prices does not in any way contribute to energy access and affordability.
Speaking at an OPEC seminar in Vienna, Pradhan said global trade practices combined with Opec’s pricing policy is responsible for the present price hike, adding that the present rates are far detached from market fundamentals.
For many oil and gas are no more reliable sources of energy as these do not contribute to energy access and affordability to all. This, he said, could dent economic development of many countries and further endanger an already fragile world economic growth.
"Political conditions, sometimes internal and sometimes external, result in reduced output of some countries. We expect from Opec and its members a commitment to step in (and) more than fill the gap to ensure sustainable prices," he said.
"My fear is – this will lead to energy poverty in many parts of the world," he said.
"It is high time to move to responsible pricing, one that balances the interests of both the producer and consumer. We also need to move to transparent and flexible markets for both oil and gas," he said.
"We often see global trade practices in the field of oil and gas, which are not contributing to energy access and affordability and become a hindrance to sustainability. Price of oil and gas have become subject to vagaries of geopolitics," he added.
The minister said globally crude prices have gone beyond the threshold which can be sustained by the world. "These prices are creating stress throughout global economy, as it is giving pain to us in India."
The global economic outlook already has threats from trade wars, geopolitical events and fear of instability coming back to the Euro Zone. "The already fragile world economic growth will be at threat if oil prices persist at these levels," he said.
India, he said, is not in favour of prices as low as $30 per barrel but it also does not support the prevailing high price which dent fiscal balance and undermine development process.
"If the world has to grow as a whole, there has to be a mutually supportive relationship between producers and consumers.
"It is in the interests of producers that other economies keep growing steadily and rapidly so as to ensure growing energy markets for themselves. This is the key to energy sustainability. OPEC as the predominant supplier has the responsibility to maintain supply equilibrium." he said.
The energy vision of Indian government, Pradhan said, stands on four pillars of energy access, efficiency, sustainability and energy security.
"Energy sustainability has to be seen in tandem with the other three pillars for a stable energy future," he said.
India, he said, has demonstrated very strong commitment to the Paris Agreement and has taken the lead in promoting the International Solar Alliance. In the oil and gas sector, it has decided to migrate to Euro VI emission norm compliant petrol and diesel by April 2020.
On Wednesday, oil prices rose after a 5-day fall with Brent crude reclaiming $75 per barrel level, on the back of a drop in US commercial crude inventories reported by the American Petroleum Institute.
Oil prices rose in early Asian trading on Wednesday, supported by a drop in US commercial crude inventories reported by the American Petroleum Institute (API). US crude inventories fell by 3 million barrels to 430.6 million barrels in the week to June 15, according to the weekly API report published on Tuesday.
Brent crude futures, the international benchmark for oil prices, were at $75.30 per barrel at 0008 GMT, up 22 cents, or 0.3 per cent, from their last close. US West Texas Intermediate (WTI) crude futures were at $65.34 a barrel, up 27 cents, or 0.4 per cent.