By Prarthana Mitra
India is considering suppliers outside of the OPEC (Oil and Petroleum Exporting Countries) cartel, its biggest oil supplier, in light of the recent hike in crude oil prices and production cuts.
Petroleum and Natural Gas Minister Dharmendra Pradhan on Monday announced the governments decisionahead of OPECs summit on Thursdayto contact other suppliers in an attempt to replace OPECs expensive oil, a prospect that can also stand to provide a greater impetus to the countrys renewable energy initiatives.
Pradhan added that India, the worlds third-largest oil consumer- accounting for 83% of OPECs oil exports- would be acting in its national interest by shifting to cheaper crude options at a press conference in New Delhi on Thursday.
OPEC members are also set to meet on Thursday to decide whether or not to extend production cuts to ease the global oil supply.
Huge dependency on OPEC
Owing to a huge reliance on imports for meeting 86% of its 4.6 million barrels per day capacity, the retail prices of fuel in India have risen sharply. This has inflated the import bill of the country and forced the government to give in to demands for tax cuts on fuel to protect customers.
“Being a big consumer and a big market, we have price-sensitive consumers, Pradhan said. “Our primary hydrocarbon requirement is crude oil and the anxiety is related to crude oil.
Pradhan added that if the cartel, which accounts for 40% of global oil production, fails to offer a reasonable and affordable price on future contracts, it would indicate a grave need to explore suppliers accounting for the remaining 60% of the world supply.
Exploring other options
This move will also enable the Indian energy department to explore natural gas, biodiesel and other renewable energy options, in keeping with the Paris climate change agreement. Pradhan noted the changing dynamics of oil transportation and said he thinks there is a lot of “potential” in biodiesel and non-fossil fuels.
India has also been increasing its consumption of natural gas, with the first cargo of liquefied natural gas set to land on Friday, as a start of a 20-year contract. Additionally, Pradhan added that Indian oil and gas companies have also invested over $5 billion in hydrocarbon assets in the United States, and have signed agreements to buy over nine million metric tonnes of LNG.
Pradhan also alerted the OPEC against unpleasant repercussions of increasing crude prices, saying that the oil industry is in a precarious position right now and it cant afford to give people more incentive to switch to renewables.