Emphasising that the world today is not categorised by a shortage of crude oil, Oil Minister H. S. Puri on Monday said oil prices above $100 per barrel (bbl) will not be sustainable.

Speaking to presspersons on the sidelines of the 26th annual Energy Technology Meet (ETM), Puri said oil producers have the sovereign right to increase or decrease crude oil prices, but this would lead to a faster pace of energy transition in the consuming countries.

“Today, I think if you see global turbulence, which you are seeing now, I made this point at the ADIPEC oil and gas conference in Abu Dhabi also. I told them categorically that it’s entirely your call on how much you want to sell, etc, but be under no mistake that if the price crosses a threshold and it feeds the inflationary situation with all the efforts at interest rates rising, etc, you will reach a 2008 like situation. Today, energy prices are crucial for a global recovery. Somebody asked me what the threshold is. Last time in 2008 it crossed $100 a barrel. Can’t keep it above $100, it will not work,” the Minister said.

Citing examples, Puri pointed to India achieving its 10 per cent ethanol blending target before the deadline.

“We reached the target of 10 per cent ethanol blending five months in advance. Now, we are at 12 per cent, and the target of 20 per cent by 2025 can be achieved easily. The international community is serious and the governments are serious. So, suddenly, biofuels are coming of age. Ultimately, it is a choice between fossil fuels and biofuels,” he added.

The ETM is organised by the Centre for High Technology (CHT), under the aegis of the Ministry of Petroleum & Natural Gas, with Engineers India (EIL) and Numaligarh Refinery (NRL) as co-hosts.

Earlier this month, Puri emphasised that oil prices above $100 a barrel will lead to “organised chaos”.

During a panel discussion at the ADIPEC oil and gas conference in Abu Dhabi, Puri said “If the price goes above $100, it’s not going to be in the interest of either the producing country or anyone’s interest. You will have large, organized chaos,”. But “you should not be worrying about the impact on India. India’s a large economy that has a lot of domestic production. We’ll cut back, we’ll do something or the other.”

Israel-Hamas conflict

Puri said the government is closely monitoring the situation in West Asia. “India will handle it with maturity. The Prime Minister’s statement is very clear. So far as energy is concerned, let us be absolutely clear that the place where the action is taking place is in many respects the centre of global energy. We will watch carefully as we go along, we will navigate our way through this. These kinds of uncertainties only encourage people to move into sustainable, cleaner fuels. I cited the global biofuel alliance as an example,” he added.

When asked about the impact of the conflict on crude oil prices, the Minister said “Today, the world is not categorised by shortage of crude oil. I mean the amount of crude oil that is required to sustain current levels of consumption, which is about 100 or 102 million barrels per day (mb/d). That is available, but some 5 mb/d has been taken off the market. So that is the issue. It is a sovereign choice and we respect those who decide. But, equally when we have to exercise a choice, we’ll take the transition quicker.”

Refining push

Earlier, during his address at the ETM, Puri stressed that the refining sector needs to build new capacity with flexibility to change the product mix as per market demand.

Besides, increasing the refining capacity without integration with petrochemicals is no longer a smart option, he added.

“This integration shall lead to reduced costs of handling and moving exchanged streams; better overall optimisation of refining and chemical plant throughput, and scale-driven efficiencies in the cost of maintenance and operations support,” the Minister said.

He urged the oil industry to continue research in the areas of catalysts, energy efficiency improvement, water conservation, etc, as some specific changes in refinery configurations (increased hydrocracking, maximising aromatic reforming) and operations would increase petrochemical yields.

“Today, India is the fourth largest refiner with a refining capacity of 254 million tonnes per annum (MTPA), after the US, China and Russia. This refining capacity is being increased to 310 MTPA by 2028, as we aspire to become a major refining hub for export of refinery products after catering to domestic demand,” he said.

The global energy landscape is witnessing a paradigm shift due to a rise in electrification, changes in the mobility sector, and the increasing share of renewables in the energy mix. The challenge for the Indian refining sector is to grow to meet the rising need for energy in the country as well as to integrate more and more with petrochemicals, bio-refining and green hydrogen.