The oil-rich Gulf nations charge India an extra $2 to 3$ per barrel as `Asian premium` which runs into billions of dollars in annual imports and adds to the soaring price of petrol and diesel in the domestic market. Indian Oil executive director Sukhendu Majumdar said on Thursday.
Asian premium is the effective high price that Asian countries such as India and China pay since the 1980s to import crude from Oil Producing and Exporting Countries (OPEC) such as Saudi Arabia and Iran. The oil cartel charges Asian countries $2-$3 higher than what it does from developed countries of Europe and the US which get preferential treatment. `Asian Premium`s impact on India`s oil import is $2-$3 per oil barrel.
This is not at all a small sum when multiplied by billions of barrels that the country imports. which in turn affects the petrol prices.` Majumdar said speaking at the MAIL TODAY 4th Energy Summit 2018. OPEC doesn`t levy the charge on the richer Western nations because Saudi Arabia adopted a marker-based price system and there was no strong crude derivative market in Asia.
`These premiums are an economic hegemony. That is why the government is constantly in dialogue with oil producing nations about the Asian premium on the ground that India. like China. is a very large and growing buyer of the product.` the Indian Oil executive said.
India has been urging the OPEC to end Asian Premium with Prime Minister Narendra Modi. and more recently oil minister Dharmendra Pradhan. asking the cartel to adopt a responsible price to provide energy to common people. India has pointed out that higher prices encourage would encourage seeking out alternative energies and reduce the demand for crude.
`We are trying to leverage our position of power to get OPEC to obliterate Asian Premium. We have not been successful yet. but the effort is on.` he said.
In the meanwhile. oil marketing firms such as Indian Oil. Bharat Petroleum and Hindustan Petroleum can optimise on the kind of crude imported. improve operating efficiency and reduce internal energy requirement for producing the final product from crude through distillation in order to soften the blow of fuel price rise. Majumdar added.
However. steps taken by us won`t bring about a significant change in fuel prices as long as international crude prices don`t soften. he said. `Changes from our side can only bring about a difference of a few paise. not rupees. Difficult structural changes will have to be brought in for significant impact on prices.` India is the world`s third largest oil consumer. and imports 80 per cent of its oil needs.
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ONGC director (exploration) AK Dwivedi on Thursday struck an optimistic note saying the large scale re-assessment of geological data had enabled the country to raise its estimate of potential oil and oil equivalent gas reserves to 41 billion tonne from 20 billion tonnes in the 1990s.
Speaking in a panel discussion at the MAIL TODAY energy conclave. Dwivedi said the increased compiling and analysis of data had been undertaken by upstream oil majors ONGC. OIL India and the Directorate General of Hydrocarbons. However. he pointed out that much of the exploration work for discovering oil and gas will take place in more difficult areas.
He also explained that the government will have to come up with a policy that can take into account higher costs involved in exploration and production of oil and gas in the difficult terrain such as the eastern offshore deep sea fields. Compared to this costs of E&.P were much lower in the western offshore and Cauvery basins. for instance.
Cairn Energy CEO Sudhir Mathur said that geological data on sedimentary basins should be made available to all companies in order to ensure a level playing field and help speed up oil and gas exploration.