Page 10 - MEOG Week 40 2021

MEOG POLICY & SECURITY MEOG

India softens tone with OPEC

OPEC INDIA appears ready to repair its frayed rela- as renewable energies and cheaper supplies of
tions with OPEC as the organisation prepares crude from US and African producers.
to roll back production cuts designed to support Puri’s more conciliatory approach to OPEC
international oil prices. comes amid forecasts that the country’s oil
The two sides have had a somewhat testy rela- demand will remain strong over the next 25
tionship over the past year, with tensions driven years, despite New Delhi’s desire to decarbonise
by volatile oil prices and opposing opinions over its economy.
how the organisation should respond. OPEC’s latest World Oil Outlook has pre-
New Delhi has previously railed at the dicted that the projected addition of 200mn pas-
decision by OPEC and its allies to constrain senger and commercial vehicles over the next 25
oil production, arguing that doing so put the years would help lift diesel and gasoline’s share
global economic recovery from the coronavirus of domestic oil demand from 51% at present to
(COVID-19) pandemic at risk. 58%.
Indian Minister of Petroleum and Natural The country’s oil demand is expected to
Gas Hardeep Singh Puri, however, took the bounce back to its pre-pandemic level of 4.9mn
opportunity at this week’s launch of OPEC’s barrels per day this year, with OPEC expecting
World Oil Outlook to talk about his govern- that figure to climb to 11mn bpd by 2045.
ment’s desire to work with more closely with the India has slowly regained control of COVID-
oil producers’ club. 19 transmission, with the Ministry of Health
Puri, noting that India relies on oil imports reporting on September 28 the country’s low-
for around 80% of its needs, said his govern- est daily numbers of COVID-19 infections and
ment wanted stronger relations with OPEC. The deaths since March. Infections rose by 18,795,
organisation supplied 71% of India’s oil imports while the number of new COVID-related deaths
in fiscal year 2020-2021. amounted to 179, health ministry data showed.
Noting that OPEC played a major role in As transmission rates have fallen the econ-
“shaping oil prices and availability”, Puri said: omy has slowly reopened, driving demand for
“India, with a huge energy market, has a vital oil and gas. Crude imports in August climbed by
interest in this regard and we look forward to 15.8% month on month and 3.1% year on year
OPEC’s leadership in ensuring this.” to 17.39mn tonnes (4.11mn bpd), representing
At the same time, however, Puri noted that a three-month high.
soaring oil prices were likely to speed up the “If the pandemic stays under control and oil
global transition away from fossil fuels toward demand keeps rising, India’s crude imports are
greener alternatives. still expected to trend higher over the coming
“Last week, crude oil prices inched upwards months and quarters,” UBS analyst Giovanni
to seven-week highs. The cost of crude oil has Staunovo told Reuters on September 25.
considerable impact on the pace of energy tran- OPEC’s longer-term projections for Indian
sition pathways,” Puri said. “It is in the collective oil demand have been echoed by one of the coun-
global interest that energy transition should be try’s largest refiners, which has said oil product
orderly.” demand is unlikely to plateau until at least 2035.
International oil benchmark Brent crude “I don’t see the plateauing of fuels demand in
topped $80 per barrel during early trading on India before 2035,” Nayara Energy CEO Alois
September 28, before retreating to around $78 Virag said during a talk at the S&P Global Platts
per barrel on September 30. Brent is up more Asia Pacific Petroleum Conference (APPEC) in
than 50% this year. Singapore this week.
Puri’s comments on high oil prices and the The executive noted, however, that down-
pursuit of alternatives are a more diplomatic take stream players would need to embrace product
on the more strident position adopted by his pre- diversification in order to become more resilient
decessor, Dharmendra Pradhan, earlier this year. to changing demand patterns. Virag said: “Petro-
Pradhan issued several warnings to OPEC chemicals is an area you have to look at to boost
that soaring oil prices would drive the country profitability and build resilience to any plateau-
to look for long and short-term solutions, such ing of fuels demand that might happen.”™

P10 www. NEWSBASE .com Week 40 06•October•2021