Page 4 - AsianOil Week 39 2021

AsianOil SOUTH ASIA AsianOil

India softens tone with OPEC

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

P4 www. NEWSBASE .com Week 39 30•September•2021