Financial Daily from THE HINDU group of publications
Monday, Oct 18, 2004
Industry & Economy - Petroleum
India initiates moves for Asian crude price marker
Mr Mani Shankar Aiyar, Union Minister for Petroleum and Natural Gas, with Mr S. Behuria, Chairman and Managing Director, BPCL, at the inauguration of the company's LPG bottling plant in Solur near Bangalore on Sunday. - G.R.N. Somashekar
Bangalore , Oct. 17
THE Petroleum & Natural Gas Ministry has got a positive response for its push for a Brent-like Asian marker for crude oil prices. The Ministry expects to host a conference of Asian petroleum buyer and seller countries in January 2005 to discuss this issue which will allow consuming Asian nations to buy crude at a discount just as in the case of Europe's benchmarks Brent and the American WTI (Western Texas Intermediary.)
The conference is aimed at ensuring the 3 Ss in oil for Asia: stability, security and sustainability, the Union Petroleum & Natural Gas Minister, Mr Mani Shankar Aiyar, said today. He was speaking to the media after opening Bharat Petroleum's new LPG bottling plant at Solur village near here.
"Unlike a decade ago, two-thirds of West Asian crude production is bought by Asian countries, principally Japan, Korea, India and China, Yet, we don't have an Asia oil products marker," such as the Brent or the WTI, which can offer considerable discounts to the buying country, the Minister said. India, for example, buys in the open wherever it can, whereas Europe buys oil from Saudi Arabia at a discount against the Brent.
So far, the move has got positive responses from producers Oman, Saudi Arabia, Qatar, Iran, Kuwait and Malaysia, while Indonesia, which has just completed its presidential elections, is expected to reconfirm. On the buyers' side, Korea, Japan and China would be making their views known soon.
Mr Aiyar said that compared to some 50 per cent self-reliance in oil a few decades ago, the country's capacity now stood at a declining 30 per cent. "Unless another Bombay High is discovered, this may decline to 15 per cent in the coming years," leaving the third generation in peril, he said earlier.
Petrol price: The recent decision to hold back a petrol price hike was valid for another two weeks. A fresh decision would be taken after discussing with the coalition partners, the Left and the Cabinet Committee on Economic Affairs.
With several gas finds along the eastern coast, the Bay of Bengal area, he said, was turning out to be the North Sea of the East.
Kerosene survey: Mr Aiyar said the Ministry had asked NCAER to make the first-ever national survey of kerosene consumption in rural areas. This was spurred by reports of diversion of huge amounts of kerosene meant for below-poverty-line families for other uses. The survey, expected to be completed by mid-2005, would make a scientific assessment of the use and demand. It would also be the Ministry's basis for allotment of kerosene to the States.
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