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India's crude oil demand to go up
Tuesday, 07 October 2003, 19:30 IST
NEW DELHI: India's oil imports are set to rise to 85 million tonnes during 2003-04, with high global prices expected to impact on the country's import bill.
With the prospect of the Organisation of Petroleum Exporting Countries (OPEC) announcing a further production cut -- after the sudden decision last month of reducing output by 900,000 barrels per day from November -- there are expectations of a further rise in crude oil prices towards year-end.
Importing around two million barrels of crude per day, India is, however, optimistic that the OPEC cut would have limited impact with several factors working against a steep jump in global prices.
"I agree that India's oil import bill has risen, but that is partly due to an increase in the quantity of imports as also the higher prices. So far, there has not been much impact of the OPEC decision to cut production by 900,000 barrels per day. Initially there was an impact of a $1.0 to $1.5 but subsequently the prices have softened slightly," Petroleum Secretary B.K. Chaturvedi told IANS.
Brent crude prices were around $28.27 per barrel at close on Friday, while U.S. oil prices have gained around $2.71 a barrel since OPEC announced its plan to cut output from next month.
"We don't see much impact at present of the OPEC decision. Further, there are several factors that may check a rise in prices. With winter coming, the demand for motor spirit (petrol and gasoline) demand in the west is coming down while that of natural gas and liquefied petroleum gas (LPG) is going up," said Chaturvedi.
He added: "There is also the factor of Iraq's production of around 1.8 million barrels per day coming back to the market. If that happens, then the prices may not be on an upward trend. We also understand that the Venezuelan production may be coming back.
"Our assessment is that all these factors are expected to ensure that the impact of this OPEC production cut is not much. For India, this would mean that till March (end of fiscal year), the impact is not beyond manageable limit."
Depending on imports for 70 percent of its requirements, India's oil import bill witnessed a 7.92 percent rise during April-August to $7.66 billion as against $7.1 billion in the corresponding five months in the previous year.
During 2002-03, India's oil import bill was $17.62 billion.
"India's imports have also increased in the initial five months. As against around 82.5 million tonnes imports last year, we expect to import around 85 million tonnes during 2003-04. This is because of growing consumption and demand for petroleum products in the market," said Chaturvedi.
The market demand has led to higher requirement by both public and private sector refiners. India currently has an installed refining capacity of 112 million tonnes -- that not only meets domestic requirement but also allows for export of petroleum products.
About rising gas prices, Chaturvedi said it was not really relevant as India does not import any natural gas.
In the case of LPG, however, there is expected to be some impact as India imports around one million tonnes of the eight million tonnes domestic requirement.
Most of the imported LPG is used to meet the requirements of the industry and automobile sector. Around seven million tonnes of LPG is used in the country as domestic cooking fuel.
Domestic gas being a subsidised fuel, Chaturvedi said the state-owned oil and gas companies would have to share the subsidy burden in view of the government decision not to raise the price of cooking gas and kerosene sold through the public distribution network to people below the poverty line.
"The first six months have already passed and now the petroleum ministry is trying to work out how all the state-owned companies in both upstream and downstream are going to share the burden," the petroleum secretary said.
The list includes all the exploration, refining and marketing companies including Oil and Natural Gas Corporation (ONGC), gas infrastructure company GAIL (India) Ltd and all other oil companies like Indian Oil Corporation.
Source: IANS
Source: IANS