Economy

India plans refiners’ joint oil deals to cut import bill

Reuters New Delhi | Updated on October 20, 2021

India’s trade deficit in September surged to a record $22.6 billion, driven by expensive imports

India is forming a group that brings together State-run and private refiners to seek better crude import deals, Oil Secretary Tarun Kapoor said on Tuesday as the country grapples with soaring oil prices.

The world’s third largest oil importer and consumer, India depends on imports for about 85 per cent of its crude and buys most of it from Middle East producers.

Joint negotiations

Initially, the group of refiners will meet once a fortnight and exchange ideas on crude purchases.

“The companies can form joint strategies and they can even go for joint negotiations wherever possible,” said Kapoor.

Also see: Parliamentary panel to study petro products pricing, marketing

Indian State refiners already jointly negotiate some crude oil purchases.

To date the one effort at a joint negotiation bringing together State-run and private refiners resulted in a deal that secured supply of Iranian oil at a deep discount.

Trade deficit

With local gasoline and gas oil prices rising to a record high amid India’s worst power crisis in years, the nation wants to redouble its efforts to buy wisely.

India’s trade deficit in September surged to a record $22.6 billion, its highest in at least 14 years, driven by expensive imports.

No rise in production

Kapoor said the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, should raise production to bring down global oil prices.

“OPEC+ should realise that this is not the right approach. They must step up production. If the demand is going up and you are not increasing production, you are trying to create a gap,” he said.

“Due to this, prices are going up and that’s not fair.”

Also see: Alarming increase in fossil fuel production, finds UNEP report

OPEC+ producers recently agreed to stick to a plan to increase November output by 400,000 barrels per day (bpd) as it looks to phase out output curbs of 5.8 million bpd over time.

Kapoor said rising oil prices would prompt oil consumers to “seriously start thinking of shifting to other forms or curtail their demand for OPEC oil somehow.”

“These kind of prices are not sustainable.”

India is already reducing the share of OPEC oil in its crude mix as refiners, that have invested billions of dollars in refinery upgrades, tap cheaper oil.

High oil prices are spurring investment in upstream activities that could lead to higher production from regions other than the Gulf, Kapoor noted.

(Reporting by Nidhi Verma; editing by Jason Neely)

Published on October 20, 2021

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