<A HREF=www.business-standard.com>BUSINESS-STANDARD.COM Pradeep Puri in New Delhi Published : April 5, 2003

In order to reduce its dependence on the Persian Gulf for the supply of crude, the government is planning to import and float at least 15 days' inventories for public sector refineries by hiring very large crude carriers.

Fifteen days of crude requirement of public sector refineries works out to around 2 million tonnes.

The government is planning to import crude from regions outside the Persian Gulf for floating the inventories.

It may enter into contracts with oil exporting countries like Norway, Nigeria, Angola, Egypt, Venezuela, Yemen, Oman, Russia and Malaysia.

As per the estimates made by Indian Oil Corporation (IOC), inventory carrying costs will come to Rs 25 crore a month, floatation costs will be Rs 40 crore a month, and costs due to inferior yields and higher freight will be Rs 225 crore.

IOC has said the costs of holding such inventories, including the interest on capital blocked for this purpose, demurrage and other incremental costs incurred, should be reimbursed by the government "as these companies are carrying inventories and taking other measures to ensure the supply of crude to the country".

The crude refining capacity in the country is around 115 million tonnes per annum (mmtpa). However, domestic crude production is in only 30 mmtpa. The shortfall of about 85 mmtpa has to be, therefore, met through imports.

Public sector oil companies account for about 47 mmtpa of the crude imported, while private sector companies account for 38 mmtpa.

Crude is mostly imported from West Asia, which accounts for about 60 per cent of India's crude imports. The balance comes from countries like Malaysia, Nigeria, Venezuela, Mexico and Egypt.

Pradeep Puri in New Delhi | April 03, 2003 12:15 IST

With the war in Iraq threatening to enter the third week, the petroleum ministry has decided to review its contingency plans to meet the country's oil requirements.

"The plans will be reviewed every 15 days to fine-tune them according to the situation on the ground," Petroleum Minister Ram Naik said on Wednesday.

The government will look for suppliers outside the war zone if the war spreads and blocks the supply routes.

In case the supply of oil is disrupted, the petroleum ministry will explore the alternatives for crude imports, including spot purchases from sources outside the Gulf region.

In the case of a crisis, the government will also try to source crude from countries outside the Persian Gulf, including Egypt, Yemen, Nigeria, Russia, Malaysia, Norway, Angola, Venezuela, Oman and Australia.

The minister said some contracts had already been signed with suppliers far away from the conflict zone. He, however, refused to divulge the names of the suppliers or the quantity of crude to be sourced from them.

Naik said the war had not yet affected the availability of oil in the country. Crude supplies had not been disrupted and the oil tanks were full, he said.

The country would start getting ONGC Videsh Ltd's 25 per cent share of oil production from the Greater Nile project in Sudan from next month, the minister added.

ONGC Videsh, a subsidiary of the Oil and Natural Gas Corporation, is also trying to buy out the other two partners in the project-the National Oil Company of China and Petronas of Malaysia.

India has 12 days' stock of crude and another 11 days' requirement in transit. It imports less than 5 per cent of its crude requirement of 78.7 million tonnes from Iraq.

The country also has a stock of petrol to last 33 days, diesel 29 days, kerosene 32 days, aviation turbine fuel 47 days and liquefied petroleum gas 15 days.

The Australian From correspondents in New York April 01, 2003

OIL prices gushed higher overnight, fuelled by fears of a bloody, drawn-out war in Iraq and fresh reports of unrest in major oil exporter Nigeria. New York's benchmark light sweet crude contract for May delivery advanced 88 cents to $US31.04 a barrel.

The price of reference Brent North Sea crude oil for May delivery rose 81 cents to $US27.16 a barrel.

"The market is up on constant war talk. There is a pretty high level of concern," said AG Edwards market analyst Bill O'Grady.

But there had been no major attacks by Iraq on its neighbours, and no large terrorist attack, he added.

"It leads me to believe ... Gulf oil production is pretty safe right now," O'Grady said. "What the market is missing is that from the oil point of view there is really not a whole lot more risk."

The White House said it saw no evidence to date that the United States needed to tap its strategic petroleum reserve to offset supply disruptions stemming from the war against Iraq.

"There is no change in the status of the strategic petroleum reserve. It remains an issue that gets reviewed on a regular basis to determine whether or not a severe supply disruption has occurred," said spokesman Ari Fleischer.

"We have seen no evidence to date of a severe supply disruption, nevertheless the experts continue to monitor it," he told reporters.

Traders were trying to sift through the reams of war news to work out how the campaign in Iraq was really progressing, said GNI trader Robert Laughlin in London.

"The interest is very much . . . in terms of the propaganda machine over the weekend, as the Americans still say the war effort is being successful despite the fact there appears to be a mini-ceasefire," he said.

Ethnic unrest in Nigeria, which has reduced the country's oil exports by more than a third, was further fuelling concern, analysts said.

Political thugs attacked an opposition rally in Nigeria's troubled Niger Delta at the weekend, driving activists into a river and hacking them with machetes, an eye-witness said in Lagos.

Nigeria is due to go to the polls for general elections on April 12 and for presidential and state gubernatorial votes on April 19, the first test of the country's fragile democracy since the 1999 return of civil rule.

Over the past two weeks a violent uprising by ethnic Ijaw militants in the western Delta, south and west of the city of Warri, has led to scores of killings and crippled the region's oil industry.

"The market is up because people are still worried about the situation in Nigeria, where there was more violence over the weekend," said Deutsche Bank analyst Adam Sieminski in London.

"It means that the 800,000 barrels a day of production that was lost last week is still out, in contrast to statements on Friday and Saturday suggesting that a compromise between ethnic groups and the government had been reached," he added.

For the moment, there were few real concerns about supplies, but more bad news could send prices soaring, Sieminski said.

"There is still enough oil coming from Saudi Arabia and even Venezuela to keep the market supplied, but with Iraq out and the conflict in Nigeria still continuing, the market is tightly balanced, and if anything else should go on, we would see higher prices," he said.

<a href=www.financialexpress.com>The finantial Express, india EDITS & COLUMNS TODAY'S COLUMNIST

Bypass US supremacy on matters political. Condemn and attack it on economic issues   Bibek Debroy On the Iraq war, the internet is much more interesting than the electronic and print media. Given embedded journalism and non-transparency about channel ownership, can you trust CNN or NBC’s reporting of collateral damage? Why do we have no official figures yet on civilian casualties during the first Gulf War or Afghanistan? The Net will give you figures.

On the Net, I discovered the following. Ignoring collateral damage, the Gulf War cost $40 billion then. Of that, 25 per cent or $10 bn was paid by US, 75 per cent or $30 bn was paid by Kuwait and Saudi Arabia. Oil prices rose from $15 a barrel before the war to $42. That’s extra revenue of $60 bn, of which 50 per cent went to Kuwaiti and Saudi governments and 50 per cent went to MNC oil companies. The governments in Kuwait and Saudi Arabia recouped their costs.

Of the $30 bn that went to oil companies, $21 bn accrued to the State and $9 bn to the private sector. The US, including the government, made a profit, even if $49 bn from armament sales is excluded. A trifle simplistic but there’s a grain of truth there. Afghanistan was also about building a 2,500 km US-owned oil pipeline through the country and Iraq is also about US desire to diversify oil sourcing away from Saudi Arabia and Venezuela. Why else has squabbling already begun about post-war reconstruction? The French will be excluded. So might the British. Is it true that Dick Cheney’s former firm, Halliburton, has already been awarded contracts?

Some propositions should be self-evident.

Proposition 1 — The Iraq war is not about terrorism or 9/11. No evidence about links between Iraq and terrorism has been able to shock or awe us. Had this war been about terrorism, the US should have picked on Saudi Arabia. Even Pakistan.

Proposition 2 — The war is not about possessing weapons of mass destruction (WMDs). Had possession been a crime, the UN Security Council should approve attacks on a large number of countries, including UK and US. If helping countries develop WMDs is a crime (as should be), smart bombs should be targeted at many countries other than Iraq. In the mid and late-1980s, many Iranians believed Saddam was an American agent.

Proposition 3 — The war is not about using WMDs against other countries. (The evidence is of use against Iraqis, not against Iran.) Hence, Article 42 of the UN Charter has doubtful applicability and Article 51 doesn’t in any case justify pre-emptive strikes. If Saddam gassed 60,000 Iraqis in 1986, isn’t this an internal affair? Or by failing to condemn US action, does the Indian government implicitly sanction such US intervention in Kashmir? The moral outrage at the loss of 60,000 Iraqi lives is justified, apart from the million Iraqi lives lost in Iran and Kuwait. However, other countries have also indulged in such misadventures. Why not pick on them? And why is moral outrage missing when Iraqi lives are lost because of sanctions?

Proposition 4 — The war is not about regime change on grounds of restoring democracy. Had that been the case, one could again have picked Saudi Arabia or Pakistan. There would have been no need for assassination attempts. And if democracy is important, one shouldn’t be so upset when a democratic Turkish Parliament refuses to offer required support.

Proposition 5 — Opposition to the Iraq war is less about supporting Saddam and more about opposing US unilateralism. As several people have argued, this opposition is not the dysfunctional Left-wing anti-American legacy of the Cold War. Fareed Zakaria argued in a recent issue of Newsweek, barring the US, opinion polls show little popular support for the war. As for US support, Hermann Goering’s quote (from Nuremberg trials) is floating around on the Net. “Why of course the people don’t want war. That is understood. But after all, it is the leaders of the country who determine the policy, and it is always a simple matter to drag the people along. All you have to do is to tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger.” That leaves support from governments that can be bought, bullied and cajoled. The State Department tells us 33 governments support the war. And another 15 want to offer anonymous support. If getting rid of a tyrant is so popular, why do these 15 countries wish to remain anonymous?

Proposition 6 — The US doesn’t care about multilateralism. Kyoto Protocol, International Criminal Court, Comprehensive Test Ban Treaty, the Anti-Ballistic Missile treaty with Russia, World Trade Organisation — how many instances do you want? It’s not surprising the peace dividend from the end of the Cold War didn’t materialise. Hence the US spends $325 bn a year on defence expenditure and $15 bn a year on aid. And the US doesn’t even bother to pay what it owes the UN on time.

Proposition 7 — The US doesn’t need to care about multilateralism. How do you determine whether Don Bradman was superior to Tiger Woods? Across sports and across time-lines, there is an objective method. Map distance between No 1 and No 2. In global power structures, map distance between No 1 and No 2 as far back as you can go. Never has this gap been as wide as it is now. The issue is not mere uni-polarity, but its intensity.

We accept the validity of propositions 1 to 6, but proposition 7 over-rides the rest. So we can’t condemn. The Non Aligned Movement is dead. The UN, especially the Security Council, hasn’t done much for us. We shouldn’t shed tears if the Security Council disappears. There will be no axis of good with Russia, China, or even with Old Europe. Lump it until product life cycles spell the demise of present uni-polarity. Meanwhile, because distance between No 1 and No 2 is less for economic matters, condemn and attack the US on economic issues (such as protectionism), leaving aside the non-economic. The $75 bn direct costs of the Iraq War are significant, especially because this time, they are being borne alone. Bypassing the political is the best way to pass the foreign policy test.

First created : 29 March 2003 1828 hrs (SST) 1028 hrs (GMT) Last modified : 29 March 2003 1828 hrs (SST) 1028 hrs (GMT) By Malcolm Scott

Acting Prime Minister Lee Hsien Loong on Saturday spoke of the war in Iraq, saying the US-led forces will undoubtedly prevail, but he also highlighted the downside risks to Singapore's economy if the war is protracted.

Speaking at a business event, Mr Lee said, "Now the optimistic view of the future is that there will be a swift and decisive war in Iraq, oil prices will fall, things will return to normal, growth will pick up in the second half. But there are downside risks because this is not a certain scenario."Advertisement He added, "The war may drag on longer than expected; it may take months instead of weeks. Oil prices may not fall quickly even after the war."

He said, "Previously people were worried about Venezuela; now there are riots in Nigeria, so that's another factor that will keep oil prices up, and there are long-term issues facing the US and European economies...In America because of over capacity and balance of payments issues, in Europe because of structural problems.

"Therefore we think 2003 is likely to be a difficult year for the global economy and also for Singapore. We've forecast 2 to 5 percent as a broad range but we don't think we'll hit 5 percent, it's going to be somewhere in the lower range, and we expect full recovery only next year."