India mulling oil buffer reserves: PM
news.sify.com New Delhi, Jan 10
Prime Minister Atal Behari Vajpayee said Friday India was considering creating strategic oil reserves to counter potential disturbances in supplies of crude oil, particularly from the Middle East.
"Crude oil prices may shoot up if tensions in West Asia(the Middle East) rise, leading to a prolonged shortage of supplies in the world oil market," Vajpayee told an international petroleum conference in the Indian capital.
"This may adversely affect our national economy. Recent developments have already affected oil markets and sent prices upwards.
"Therefore oil security has come to occupy a key position in the present policy matrix of our government. We are examining the feasibility of establishing strategic storage of crude oil and petroleum products in our country to create a buffer for meeting unforeseen disturbances and strengthening India's oil security."
Vajpayee said the "security of supplies has become one of the most important challenges that needs to be carefully addressed".
His remarks come against the backdrop of the possibility of a US-led invasion of Iraq, which has heightened concerns about a disruption in oil supplies as well as a rise in prices of fuel in India.
According to oil ministry officials, India keeps about 10-12 days of crude stocks.
India currently imports 70 per cent of its requirement of oil and petroleum products - most of it from the Middle East and particularly Iraq.
India's state-run oil firms last week were forced to increase the price of petrol and diesel by one rupee a litre following a rise in global oil prices.
The projected requirement in India for the year to March 2003 is 108 million tonnes of crude oil compared with production of 33 million tonnes. Consumption of natural gas is expected to be 55 million tonnes compared with production of 24 million tonnes.
Vajpayee urged the domestic oil sector to increase production, without which he said "the nation would be subject to volatility in crude oil supplies and prices and oil security would be difficult to achieve."
He also urged private domestic and foreign players to cooperate with India in the hydrocarbon technology sector.
Vajpayee said it was important that the existing "energy resource gap between the developing and developed countries" be bridged.
Indian Oil Minister Ram Naik, speaking at the same conference said he hoped that a meeting of the Organisation of Petroleum Exporting Countries(OPEC) in Vienna on Sunday would bring good news for international consumers.
On Wednesday, Naik said he would petition OPEC for an output hike as oil prices have leapt to 32 dollars a barrel this month from 19 dollars last February.
OPEC president Abdulla Bin Hamed Al Attiyah of Qatar, in New Delhi for the petroleum meet, said Thursday that the organisation's meeting in Vienna this weekend would consider India's request for concessional pricing of crude oil for developing countries.
OPEC oil ministers head to Vienna this weekend to discuss proposals spearheaded by Saudi Arabia for the cartel to raise output to help calm a market roiled by a strike in Venezuela and a possible war in Iraq.