The Hindu : Naik seeks concessional oil pricing for poor countries

Online edition of India's National Newspaper
Sunday, Sep 22, 2002

International

International

Naik seeks concessional oil pricing for poor countries

Osaka Sept. 21. India today sought a concession in the pricing of crude oil, and liberal credit terms for developing countries to offset the spurt in global crude prices. ``In a high price scenario, there is a need for oil producers to extend concessional pricing and liberal credit terms to developing countries,'' the Petroleum Minister, Ram Naik, said in his address to the 8th International Energy Forum here.

Discussions at the meeting, which bring together oil-producing and major consuming countries, focussed on current international issues such as price volatility, limited transparency and reliability of data as well as long-term energy situation.

Mr. Naik said the oil markets were in turmoil as the OPEC quota had fallen from about 5 million barrels per day between 1998 and 2002, while oil demand during the corresponding period had 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 oil producers, with substantial spare capacity, to increase production and bring prices down to reasonable levels and minimise price volatility,'' he said.

Suggesting ways of reducing price volatility, Mr. Naik suggested that the oil cartel (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 movement arising from speculative action while pricing physical cargoes.

Seeking a mechanism to insulate developing countries from high volatilities, he said oil-producers should extend discounted pricing to these countries while removing disparities in crude pricing.

Crude oil prices had jumped 40 per cent this year to close to $ 30 a barrel while India was comfortable at $ 22-23 a barrel.

Mr. Naik, speaking at the first session on "World Energy Situation and Outlook,'' chaired by the Saudi Oil Minister, Ali T. Naimi, stressed the need for sustainable and stable oil prices.

Earlier in the day, Mr. Naik had bilateral meetings with the Japanese Vice-Minister of International Affairs, the Kuwaiti Oil Minister, the Energy Minister of Sudan and the UAE Minister of Petroleum. An important issue taken up by Mr. 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.

As per the extant methodology for fixation of official selling prices by the Middle East producers, on FOB basis, crude costs $ 1.50-2 per barrel higher in comparison to the North American and European markets. — PTI

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