“That was in a way (an) undiplomatic answer by some of our old friend. I politely disagree with that kind of approach. Certainly India has its own strategy, when and how to use our own storage, and we are conscious about our interests,” Pradhan said while speaking at the Times Network India Economic Conclave.
Pradhan said that India, being a major consumer country, will always keep its interest in mind while taking strategic and economic decisions.
On India’s dependence, the minister emphasised that India is free to buy oil from whosoever serves our requirement.
“We are an open, free market. Our oil marketing companies and private sector oil majors are free to take oil from any part of the world, whichever country will provide favourable business terms, whether it is America, or Iraq or UAE or Saudi Arabia. India’s common interest is paramount in decision,” he added.
Iraq, which is part of the Opec, is India’s largest supplier, he said, adding UAE “is a very reliable partner” and there are off-take agreements with Kuwait and certain African countries.
UAE, Kuwait and Nigeria — some of the biggest suppliers of oil to India — are all Opec members.
India’s plea; Opec’s response
Hit hard by rising oil prices, the oil minister has repeatedly called on the Organization of Petroleum Exporting Countries (Opec) and its allies, known as Opec+, to ease supply curbs.
However, Saudi Arabia has been overlooking India’s plea for easing production controls.
In response, Saudi energy minister Prince Abdulaziz bin Salman had suggested India dip into strategic reserves filled with cheaper oil bought last year.
Strategic oil reserves
In April-May 2020, India had purchased 16.71 million barrels of crude and filled all the three strategic petroleum reserves created at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka.
The average cost of that crude purchase was $19 per barrel, according to Pradhan’s written reply to a question in the Rajya Sabha on September 21, 2020.
‘Reduce dependence on Middle East oil’
The oil ministry has already urged domestic refiners to speed up their diversification of crude resources and reduce dependence on the Middle East.
The Centre is opting for a fresh new address to fulfil its oil demand.
This month, the first cargo from new oil producer Guyana to India has departed from a production facility off the South American nation’s coast in a vessel chartered by trading firm Trafigura, data from Refinitiv Eikon showed.
It marks a major shift as India imports more than 80 per cent of its oil needs and relies heavily on the Middle East. The country is the world’s third-biggest oil importer and consumer.
The cargo from Guyana was bought by HPCL-Mittal Energy Ltd, a joint venture between state-run Hindustan Petroleum Corp and steel tycoon LN Mittal, a source with knowledge of the matter said.
Rising petrol, diesel price
Retail petrol and diesel prices had hit record highs last month. Petrol crossed Rs 100 mark in some places in Rajasthan, Madhya Pradesh and Maharashtra.
Rates would have gone up further as international oil prices rallied after the OPEC+ decision but oil companies hit a freeze button in February-end the moment assembly elections were announced in five states, including West Bengal, Assam, Tamil Nadu and Kerala.
After more than three weeks of status quo, petrol and diesel prices were cut on March 24 and 25 as international oil prices fell on prospects of speedy recovery in consumption getting clouded by the second wave of Covid-19 cases.
Petrol price was cut by 39 paise a litre and diesel by 37 paise in two days. Rates were unchanged on Friday as oil rebounded on concerns over the blockage of the Suez Canal.
The oil minister said prices have started to reduce and they are being passed on to consumers.
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Desley Sherwin, senior associate at Roythornes.