The Hindu Business Line : No reduction in petro product prices now: Deora

Consumers may have to wait for sometime before they see any reduction in the prices of petrol and diesel as the oil companies continue to make losses even after the recent fluctuations in international oil prices.

"The international oil prices continue to fluctuate. For instance, the Indian basket has increased over a dollar per barrel on Tuesday. In view of continuing under-recoveries on diesel, kerosene and liquefied petroleum gas (LPG), a review would be considered after a more permanent drop in international prices," according to the Union Petroleum Minister, Mr Murli Deora.

Prices for the Indian crude oil basket are now in the range of $56-58 per barrel compared to about $67 a barrel when the last increase in prices of petrol and diesel was made in June (petrol price was raised by Rs 4 a litre and diesel by Rs 2 per litre). The Indian crude basket stood at $57.97 a barrel on Tuesday ($56.87 on November 6).

`Close watch'

"The Government is keeping a close watch on the volatile prices though seasonally oil prices are expected to increase during the winter months. We do not want to decide on the prices on short-term trends. The futures market predicts a price of $64 in January and $75 in June and so any reduction now will be premature and short-lived,'' the Petroleum Secretary, Mr M.S. Srinivasan, said. The Minister and the Secretary were speaking at the Economic Editors' Conference held here on Wednesday.

Ethanol blended petrol

As regards the ethanol blended petrol programme, the Secretary said, from June 2007, the Government is confident of introducing blending of 10 per cent ethanol into petrol across the country. He said that the use of five per cent ethanol-mixed petrol is expected to spread to the rest of the country by November 15.

"We have already tied up 50 per cent of the 560 million tonne of ethanol needed for five per cent mixing at Rs 21.50 a litre," he said. India will need 1.12 billion litres of ethanol a year for the move to 10 per cent blended petrol.

Exploration efforts

The oil companies are aggressively pursuing a policy of gaining global properties, Mr Deora said. ONGC Videsh Ltd (OVL) has a target to acquire 20 million tonne per annum (MTPA) of oil and equivalent gas production by 2020 but efforts are being made to achieve it even earlier, he added.

Refining capacity

By the beginning of the Eleventh Plan (April 2007), the country's refining capacity will be around 148.97 MTPA, of which State-run refiners will account for nearly 70 per cent, Mr Deora said. Currently, the country's crude oil refining capacity is 138 MTPA. In the 11th Plan, there is a target of adding 86 MTPA of new refining capacity, he said adding that this would take the country's total refining capacity to 234.96 MTPA by 2012.

Outlining the forthcoming agenda of the Ministry, Mr Deora said that his Ministry is shortly going to announce a suitable gas pipeline policy, frame parameters for a possible open acreage exploration policy and fine-tune delivery mechanism for the fuel meant for the vulnerable sections of society so that there is minimum leakages. Besides, the Ministry is also working at ensuring abundant availability of kerosene and LPG, technological upgradation in the State-owned oil companies and new investments abroad, he said.

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