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New Delhi: Responding to the surprise production cut announced by OPEC earlier on January 5 this year which sent crude oil prices soaring to its highest since February 2020, India said categorically that if oil-producing countries do not recognise the country's energy ambitions, it will innovate, rely on newer business models and move more towards alternative sources of energy to ensure its energy security. The statement was made by Minister for Petroleum and Natural Gas Dharmendra Pradhan at a panel discussion organised by the Atlantic Council Global Energy Forum on 'Setting the 2021 global energy agenda' on Tuesday. After the statement was made, the panel discussion saw OPEC Secretary General HE Mohammad Barkindo assuring India that the country's energy interest are a priority for OPEC and recovery will not be possible without India and other consuming countries.
Speaking during the panel discussion, Pradhan said that the production cut announced by OPEC, led by Saudi Arabia, on January 5 has created confusion for consuming countries and it will push India to move more towards alternative sources of energy. "When we were all discussing the global energy agenda of 2021 few months back, we were speaking about consumption-centric economic and demand revival. And we were supposed to restrict our production cut or control and ramp up crude oil production by January (2021), but contrary to that, OPEC has decided to control oil production, and it has created confusion for the consuming countries. This kind of scenario will push us to move more towards alternative energy."
"Being a major energy consumer of the globe today, we will be looking more towards alternative energy sources, may be towards green Hydrogen, solar power, bio-mass conversion. If producing countries do not recognise India's aspirations, then innovation, new business models are bound to come up," said Pradhan.
Responding to Pradhan's statement, Barkindo said that the OPEC was focussed on assisting markets, including India, to maintain stability and has also decided to meet every month to ensure that imbalances do not re-emerge. "I want to recall that the historic decision that we took last year at the height of the meltdown to reduce supply by about 9.7 MBPD up to April 2022 was taken as a holistic response to this unprecedented meltdown, taking into account the fact that projections for 2021 and beyond was yet to be made. Then we decided to temper the restoration of supplies and we brought back about 425,000 barrels per day. So, we took the decision to assist all of us in the group, including India, and Arab consumers, to maintain stability. Our target remains stable oil markets."
"We have also agreed to meet every month to ensure that we do not allow this imbalance to re-emerge. We all agree that the recovery is fragile, there are more uncertainties, but we are cautiously optimistic that the recovery will materialise this year," said the OPEC Secretary General.
He went on to reassure India that the stability that OPEC is focussed on achieving is not just for the region but for India as well and the organisation appreciates its relationship with India. "I also want to take this opportunity to assure our consumers, particularly India, that whatever decision we take, we have the interest of our consumers in mind. This stability is not only for us, Mr Pradhan, it is for you as well. Recovery will not be possible without India and other consuming countries. We duly appreciate our relationship with India," said Barkindo.
Responding to a question on Saudi Arabia's unilateral decision to cut crude oil production sharply earlier on January 5, Barkindo said, "First of all, it wasn't a unilateral decision. That was a decision taken by the entire OPEC and non-OPEC countries in the declaration of cooperation. Of course, it was offered by the Kingdom of Saudi Arabia and it is not the first time they have come forward to provide their leadership to take it upon themselves to charge from the front to make sure that we obtain the common objectives of sustainable stability."
On being asked about India's roadmap for energy transition, Pradhan said that India, being an emerging economy, will have a different strategy for charting its energy transition and will continue to use all sources of energy. "India is a net energy importer and is a favoured destination for any country's export product. Looking at our consumption behaviour, our aspirations, we have our own course for negotiating our energy transition. Being an emerging economy, we will continue to use all sources of energy. I am making that statement very politely and cautiously. We will be choosing alternative energy. We will be choosing solar energy. And recently, we have started blending Hydrogen with CNG as transportation fuel. We will focus on biofuels, ethanol-blending programme, more supercritical power plants, more energy-efficient equipment and instrument. This is our strategy for a cleaner and greener path."
The statement comes in the backdrop of the government placing a lot of emphasis on increasing the share of natural gas in the economy to 15 percent by 2030. Since India imports nearly 80 percent of its crude oil requirement, it is heavily dependent on the volatile crude oil market for meeting its energy needs. It is noteworthy that the government's plan to increase the share of natural gas in the economy is part of its strategy to reduce the import of crude oil and substitute it with liquefied natural gas (LNG), which is relatively cleaner in comparison to conventional fuel.
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