With local petrol and diesel prices hitting record highs amid India’s worst power crisis in the past few years, the country is looking to redouble its efforts to buy wisely.
see photosInitially, the group of refiners will meet once in a fortnight and exchange views on the purchase of crude oil.
Oil Secretary Tarun Kapoor said on Tuesday that India is forming a group that brings together government and private refiners to find better crude import deals, as the country grapples with rising oil prices. The world’s third largest oil importer and consumer, India relies on imports for about 85% of its crude oil and buys most of it from producers in the Middle East.
Initially, the group of refiners will meet once in a fortnight and exchange views on the purchase of crude oil.
“Companies can make joint strategies and wherever possible, they can even go for joint talks,” Kapoor, a top bureaucrat in the petroleum ministry, told Reuters.
Indian state refiners are already in talks to jointly purchase some crude.
To date, a joint negotiation effort to bring together not only state-run but private refiners has resulted in a deal that secured Iranian oil supplies at a deep discount. With local petrol and diesel prices hitting record highs amid India’s worst power crisis in the past few years, the country is looking to redouble its efforts to buy wisely.
India is dependent on 85% of its crude oil imports and buys most of it from producers in the Middle East.
India’s trade deficit widened to $22.6 billion in September, the highest in at least 14 years, driven by costly imports.
Kapoor said the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, should increase production to bring down global oil prices.
“OPEC+ should realize that this is not the right approach, they should increase production. If demand is increasing and you are not increasing production, you are trying to make a difference,” he said.
“Because of this, prices are rising and it is not fair”.
OPEC+ producers recently agreed to stick to a plan to increase November production by 400,000 barrels per day (bpd) as it seeks to end production restrictions of 5.8 million bpd over time.
Kapoor said rising oil prices would make oil consumers “start to think seriously about shifting to other forms or somehow reduce their demand for OPEC oil”.
“Prices like this are not sustainable.”
India is already reducing OPEC oil’s share in crude oil as refiners who have invested billions of dollars in refinery upgrades are tapping into cheaper oil.
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Kapoor said higher oil prices are driving investment in upstream activities, which could lead to higher production from regions other than the Gulf.
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