Soaring crude must be tamed before it kills global economic growth, says PM

Flagging concerns of oil consuming nations like India, Prime Minister Narendra Modi on Monday pointed out to oil producers like Saudi Arabia that higher crude prices, which have already sent retail petrol, diesel and LPG rates to record highs, are hurting global economic growth and they should do more to bring down the rates to reasonable levels.

He also asked them to review the payment terms in order to provide relief to a weakened rupee. He was speaking at the third annual brainstorming meeting with chief executives of top global and Indian oil and gas companies and experts.

Modi’s nudge to countries like Saudi Arabia comes against the backdrop of ever-increasing prices of fuel and public unrest amid increased concerns within the ruling dispensation ahead of the approaching five Assembly elections, considered the semi-finals before the 2019 Lok Sabha polls finals.

The PM also appealed to the oil producing countries to channel their investible surplus to pursue commercial exploitation in the oil sector in developing countries, a statement from his office said. During the interaction, the Prime Minister highlighted the significant positioning of India in the oil and gas market and said the oil market was producer driven and quantity and prices were determined by oil producing countries.

“Though there is enough production, the unique features of marketing in the oil sector have pushed up the oil prices. The Prime Minister made a strong case for partnership between the producers and consumers in the oil market, as it exists in other markets. This will help stabilise the global economy which is on path of recovery,” said the PMO statement.

Modi highlighted that the consuming countries, due to rising crude oil prices, face many other economic challenges, including serious resource crunch. “The cooperation of the oil producing countries would be very critical to bridge this gap. He appealed to oil producing countries to channel their investible surplus to pursue commercial exploitation in oil sector in the developing countries,” said the PMO.

He also sought the role of private participation in the distribution of gas sector. On technology, he appealed for assistance in areas where high pressure and high temperature technology applications are relevant to commercial exploitation of natural gas. Modi reiterated for review of payment terms so as to provide temporary relief to the local currency, the statement said.

The high-level meeting included Ministers from Saudi Arabia and UAE and CEOs and experts from organisations including Saudi ARAMCO, ADNOC, BP, Rosneft, IHS Markit, Pioneer Natural Resources Company, Emerson Electric Company, Tellurian, Mubadala Investment Company, Schlumberger Ltd,

Wood Mackenzie, World Bank, International Energy Agency (IEA), NIPFP, Brookings India and various Indian companies involved in both upstream and downstream operations. Finance Minister Arun Jaitley, Petroleum Minister Dharmendra Pradhan, Vice-Chairman NITI Aayog Rajiv Kumar and senior officials from the government and Niti Aayog were also present in the brainstorming session to deal the current scenario in the oil and gas industry.

The experts made a special mention of India’s competitive ranking from the upstream investment point of view which has gone up from 56 to 44. Subjects such as expansion of oil and gas infrastructure in India; enhancing exploration and production; potential in solar energy and biofuels; and the Government’s holistic approach to the energy sector came up for discussion.

During the interaction, the participants appreciated the steps taken by the Government for ease of doing business, specifically in the energy sector. The experts appreciated the unique initiative of this kind of a dialogue which brings various stakeholders together on policy matters.

Modi also spoke about the various policy initiatives and developmental measures undertaken by government in the sector. He highlighted the liberalisation in gas pricing and marketing and about the ongoing commercial exploitation, and made a special mention of extension of production sharing contracts.