October 28, 2020: Prime Minister Narendra Modi on Monday said that India plans to grow its refining capacity from around 250 million tonnes per annum (mtpa) to 400 mtpa by 2025.
This expected jump in production by more than half comes in the backdrop of India being a key refining hub in Asia through 23 refineries. Large Indian refiners include Indian Oil Corporation, Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd, Nayara Energy Ltd (formerly Essar Oil) and Reliance Industries Ltd.
While speaking at India Energy Forum by CERAWeek, PM Modi also pitched for responsible pricing to energy producers. This comes at a time when India—the world’s third-largest oil importer and the fourth-largest buyer of liquefied natural gas—has been trying to buffer its consumers from fluctuations in global prices.
“For too long, the world has seen crude prices on a roller-coaster. We need to move towards responsible pricing. We have to work towards transparent and flexible markets for both oil and gas,” Modi said.
India, which is one of the major energy consumers for producers such as Organization of the Petroleum Exporting Countries (Opec) has been calling for a global consensus on “responsible pricing”. This assumes significance given that Opec accounts for 80% of India’s crude oil imports and around 40% of global production.
“This year has been challenging for the energy sector. Energy demand fell by almost one third. There has been price instability. Investment decisions have been impacted. Leading global bodies project that there will be a contraction in global energy demand over the next few years also. But, these agencies project India to emerge as a leading energy consumer. India is set to nearly double its energy consumption over the long term,” PM Modi said.
With its economy facing headwinds, India has been trying to impress upon Opec and its allies to not affect deeper crude oil production cuts, and has also been pitching for better commercial terms for crude oil imports. These include; a reduction in official selling price, extension of credit period from existing 30 days to 90 days from bill of lading, freight discount and open credit based on credit worthiness of Indian state-run refineries.
Also, India has consistently been pitching for a price and terms correction on the so-called Asian premium. With most Asian countries being primarily dependent on West Asia to meet their energy needs, customers from the continent are seen paying the Asian premium as compared to the prices paid by the US or the European Union.
“We are driving strategic and comprehensive energy engagements with the key global energy players. As part of India’s Neighbourhood First Policy, we are developing energy corridors with our neighbouring countries for mutual benefit,” PM Modi said.
This comes in the backdrop of India looking at private investment to raise domestic oil and gas production, which has stagnated for the last few years. PM Modi in 2015 had set a target of reducing India’s oil dependence by 10% to 67% (based on import dependence of 77% in 2014-15) by 2022.
“I wish to place on record my deep appreciation to H.E. Mr. Dan Brouillette, the US Secretary of Energy and His Royal Highness Prince Abdulaziz, Minister of Energy of Saudi Arabia for their participation in the inaugural session. This is reflective of our growing strategic energy partnership with the US and Saudi Arabia,” petroleum minister Dharmendra Pradhan said in his statement.
India is exploring the possibility of storing crude oil in the Strategic Petroleum Reserve of the US as part of its energy security strategy.
Such an arrangement will help India to tackle emergency situations and help it tide over short-term supply disruptions.
“Energy has become an essential component and even a strategic component in our bilateral engagements with several key global players,” Pradhan added.
In his address, US energy secretary Dan Brouillette said that the USA became India’s 6th largest crude oil supplier and 5th largest LNG supplier last year.
India Energy Forum is being attended by the chief executive officers (CEOs) of top global and Indian companies; including Abu Dhabi National Oil Company (ADNOC), Qatar Petroleum, BP Plc, France’ Total S.A, Russia’s Rosneft and Reliance Industries. The virtual meeting will also be attended by Mohammad Sanusi Barkindo, secretary general of Opec; Fatih Birol, executive director of Paris-based International Energy Agency; Joseph Mc Monigle, secretary general of International Energy Forum; and Yury Sentyurin, secretary-general, Gas Exporting Countries Forum.
Source: live mint