SHRI RAM NAIK PRESSES FOR STABLE
OIL PRICES AT SUSTAINABLE LEVELS AT THE INTERNATIONAL ENERGY FORUM
Shri Ram Naik, Minister of Petroleum
and Natural Gas, speaking at the First Session of "World Energy
Situation and Outlook", at Osaka, Japan today while highlighting
the concerns of the consuming countries, stressed the need for
sustainable and stable oil prices. The session was chaired by
Saudi Oil Minister Ali I. Naimi with Oil Ministers of US, China,
panelists from witnessed views by oil producers represented by
OPEC and major oil consumers like US, China and Netherlands and
OPEC and International Energy Agency. The International Energy
Agency also presented a paper during this session. The discussion
was focused on current international energy issues like price
volatility, limited transparency and reliability of data as well
as long term energy situation over the next 2 decades.
Shri Naik stated that the oil market
is in turmoil as the OPEC quota had fallen from about 5 million
barrels/day between 1998 and 2002 while oil demand during the
corresponding period has grown by 2.5 million barrels per day.
Speculative activity thrives in a market with deficit supplies
and low inventories and there is a need for the oil producers,
with substantial spare capacity, to increase production and bring
prices down to reasonable levels and minimize price volatility.
He also reiterated that in a high price scenario, there is a need
for oil producers to extend concessional pricing and liberal credit
terms to developing countries and to redress the different pricing
for different region mechanism so that Asia Pacific which comprises
most developing countries gets the most favourable price.
Suggesting ways of reducing price
volatility, the Minister also suggested that OPEC implement Caps
and Floors for physical cargoes when the price band mechanism
is breached besides adjustment of supplies. He also suggested
ignoring the abnormal price movements arising from speculative
action while pricing physical cargoes. The mechanism for these
could be decided by an expert body set up by the International
Energy Forum for this purpose.
Earlier in the day, Shri Naik had
bilateral meetings with the Vice Minister of International Affairs,
METI of Japan, Acting Oil Minister of Kuwait, Minister of Energy
and Mining of Sudan and the UAE Minister of Petroleum and Mineral
Resources. In the bilateral meeting with the Japanese Vice Minister,
investment opportunities in India in which the Japanese companies
could participate were discussed. The areas for investment suggested
by the Indian side included joint participation in oil exploration
and production projects in India and third countries, LNG projects
and the downstream petroleum infrastructure in India.
An important issue taken up by Shri
Naik with the Japanese Vice Minister related to the pricing pattern
by the Middle East producers for North America, Europe and the
countries located east of Suez. It may be recalled that as per
the extant methodology for fixation of official selling prices
by the Middle East producers, on FOB basis, Middle East crude
costs $1.50 to $2 per barrel higher in comparison to North American
and European markets. The Japanese side shared the Indian concern
and suggested that major consumers east of Suez like India, Japan,
China, South Korea along with other ASEAN consumers need to take
up this issues, if necessary jointly, with the Middle East oil
exporters.
In his bilateral meetings with his
UAE and Kuwaiti counterparts, Shri Naik invited investments from
the Kuwaiti and UAE companies in India’s hydrocarbon sector including
oil refining and LNG projects. Participation of the Indian oil
companies in the petroleum sector projects in Kuwait and UAE was
also discussed. The Kuwaiti side agreed to receive an Indian technical
delegation to discuss the issue of the crude pricing methodology
for the consumers of different regions.
With his Sudanese counterpart, participation
of Indian oil companies in Sudan’s upstream petroleum sector was
discussed. The Sudanese Energy Minister suggested that a number
of exploration blocs are still available for award and that an
Indian delegation should visit Sudan early to have an on the spot
assessment. Based on the interest of the Indian side, Sudanese
government could consider granting exploration concessions including
on negotiated basis. It was agreed that an Indian delegation would
visit Sudan over the next one month.
