High oil prices make energy security difficult: Jaipal Reddy

Concerned with the volatility in global crude oil prices, the Petroleum Minister, Mr S. Jaipal Reddy, said “for an emerging economy like India, higher oil prices lead to higher inflation’’

Speaking at the 20th World Petroleum Congress, Doha, on Monday, the Minister said: “net oil importing countries such as India experiences deterioration in their balance of payments and downward pressure on exchange rates. As a result, the task of securing energy becomes difficult as the prices move upward.’’

The Minister once again pitched for moving over-the counter transactions and trading in ‘paper barrels’ to regulated exchanges.

In early days of OPEC, the prices were more regulated. India meets almost 80 per cent of its total crude oil requirements through imports. In 2010-11, the country imported 163.594 million tonnes of crude from over 30 countries.

Talking about the country’s energy requirements, the Minister said India is looking at long-term sourcing of liquefied natural gas. “Our companies are also looking for investment opportunities in liquefied natural gas plants in producer nations. Qatar has been our long-term partner country in this area. We are keen to have more such relations.’’

Since the domestic demand for natural gas exceeds the availability of gas from domestic sources, import of liquefied natural gas becomes inevitable. “Realising this, our liquefied natural gas re-gasification capacity is being expanded,’’ Mr Reddy added.

India had recently conveyed to Qatar, its requirement of additional quantity of crude oil and liquefied natural gas supplies on a long-term contract and discussions on the same are on going.

According to information available from Petronet LNG and Hazira LNG Pvt Ltd, 16.58 million tonne of liquefied natural gas was imported during the period between January 2010 and October 2011.

The average price of imported gas during the period through Petronet was $6.33/mBtu, whereas that imported by Hazia LNG was $8.22/mBtu. The present rates of natural gas from domestic sources ranges between $2.2/mBtu to $7.03/mBtu depending on the gas source and customer.

Separately, in a bilateral meeting with his counterpart from the United Arab Emirates, Mohamed Bin Dhaen Al Hamli, the Minister sought more crude oil and liquefied petrol gas (LPG) supplies from the United Arab Emirates.

India is expanding its LPG coverage in rural areas. The overall LPG is being increased to 75 per cent from 57 per cent of the population by providing 55 million new LPG connections by 2015. The LPG import has risen to 4.498 mt in 2010-11 from 2.732 mt in 2009-10 and 2.360 mt in 2008-09.

In Doha, Mr Reddy is scheduled to meet delegates from Qatar, Kazakhstan, the European Union and Oman among others during the conference, which seeks cooperation in the oil and gas sector.

COMMENT NOW