Debating India

India wins support on crude supply deals

Wednesday 5 January 2005, by DUTTA*Sanjay

NEW DELHI: The European Union arose out of the region’s steel and coal communities. It could be that Jawaharlal Nehru’s vision of an Asian Union, articulated at the Delhi Asian Relations Conference in March 1947, will emerge out of a barrel of oil. A small beginning was made on Wednesday, a day before a conclave of key Asian crude buyers and West Asian sellers, when senior Opec members supported India’s proposal to replace annual supply contracts with long-term deals to cushion price volatility.

The breakthrough came at a series of one-on-one meetings oil minister Mani Shankar Aiyar held with his counterparts attending the conclave, being billed as mini-Opec. Saudi Arabia was the first to come on board, followed by Qatar and Oman. "We are open to long-term contracts (with India) but every contract has a price. If the consumer is willing for take-or-pay, I don’t think there is any problem," Saudi oil minister Ali Al Naimi said.

"The biggest concern any consuming country has is security of supplies, stable market and fair prices... We, as the world’s largest producer, have committed to security of supplies," he said.

Saudi Arabia is India’s single-largest supplier, providing 23.55 mt (million tonnes) of the 90.43 mt of crude imported in 2003-04. Naimi’s words must sound like music to the UPA government which has been struggling to shield consumers from flaring prices in the last seven months it has been in power.

Price volatility has been a concern for government planners as India spends about $90 billion to import 70 per cent of its crude requirement. Growth rate is estimated to falter 1 per cent with every $5/barrel rise in prices. For consumers, each increased dollar meant paying 50-60 paise/litre extra .

No wonder, Quatar’s Abdullah Bin Hamad Al Attiyah too agreed that long-term contracts could be a way to stabilise the markets. "It is a good idea. We should discuss it." His view was shared by Oman’s Mohammed bin Hammad bin Saif Al Ruhmi.

For Aiyar, the bilaterals meant the moment of truth for Asia. "We are forging a regional identity which might lead to an Asian Oil Community. That is the road to making the 21st Century the Asian Century."

See online : Times of India

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