The Hindu : OPEC agrees to review oil prices for India

Online edition of India's National Newspaper
Thursday, Sep 26, 2002

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OPEC agrees to review oil prices for India

By Our Special Correspondent

NEW DELHI SEPT. 25. The Organisation of Petroleum Exporting Countries (OPEC) has agreed to review the premium being charged on crude oil supplies to India, according to the Petroleum Minister, Ram Naik.

He said the cartel had agreed to consider this after it was provided with more data on the quantities lifted by India and the price being paid.

Mr. Naik, who was talking to reporters here after his return from the International Energy Forum meet held at Osaka, Japan, said the issue of disparity between the Asian and European prices was recognised at the meet. At present the prices being paid by India was $ 1.50 to $ 2 a barrel higher than the prices paid by the European countries despite India's proximity to the West Asian countries.

Mr. Naik said that Japan, China and South Korea supported India's contention on the higher pricing pattern for the Asian countries. The United States and the European countries were being supplied crude at lower prices because of the large quantities consumed by them. However, consumption by India, Japan, Korea and China would overtake American crude oil consumption in the next few years, he said.

Mr. Naik sought concessional pricing of crude oil and liberal credit terms for the developing countries to offset the spurt in global crude prices at the forum.

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

The oil markets were in turmoil, as the OPEC quota had fallen from about 5 million barrels a day between 1998 and 2002, while the oil demand during the corresponding period had grown by 2.5 million barrels a day. Speculative activity thrived in a market with deficit supplies and low inventories. There was, thus, a need for oil producers, with substantial spare capacity, to increase the production and bring prices down to reasonable levels and minimise price volatility.

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