Prime Minister’s Office and Petroleum Ministry are jointly carrying on exercises taking into account the trends of the global oil prices and the possibilities of expanding the areas of oil fields development and exploration both inside and outside the country. India has imported 80 per cent of all petroleum products consumed and 70 per cent of the total natural gas consumed during the financial year 2014-15.Prime Minister has indicated that the imports have to be brought down in a deliberate manner and by 2030, it should be cut down by half.

The anxiety on the part of the Government is due to the fact that India’s oil demand growth between 2013 and 2040 would be the highest in the world with a compounded annual growth rate of 3.5 per cent. While, India’s economy starts growing at a higher rate surpassing China, the demand for energy grows faster and with the indigenous production not yet increasing at a faster pace, the pressure on more imports continues putting pressure on the country’s precious foreign exchange reserves. The price of crude oil in the global market is around US$ 60 per barrel now and this price also may go up after June 30, the deadline for the conclusion of the nuclear deal with Iran by the western countries.

The fact is that the NDA Government got advantage of the falling crude oil prices in the major period of 2014-15 and this had positive impact on the fiscal position of the centre. Much of the credit of fiscal management claimed by the Finance Minister Arun Jaitley goes to the declining oil prices during that period. On May 26, 2014 when the Narendra Modi government took over, the price of the Indian basket of crude oil was $ 108.05 per barrel and it fell by around 60 per cent to$ 43.36 per cent by January 14, 2015.After that there was a rise and on March 31, 2015, the last day of the financial year 2014-15, the Indian basket of crude oil purchased cost $ 53.64 per barrel..In May this year, for some days, the crude oil price ranged above US$ 64 but again it is at the level of 59 to 61 US dollar per barrel.

Thus, the Government has to be prepared for a tough time in terms of foreign exchange requirements if the crude oil price goes up during the next six months. At the beginning of the financial year, there was some indication that the Indian experts on the basis of their projections have put the average price of crude oil at US $ 75 in the last part of the current fiscal. That way they have taken enough cushion and if India is fortunate, the average price may not reach that level. But the global oil market is so uncertain that India has to be prepared for all eventualities.

Petroleum Minister Dharmendra Pradhan has been meticulously working on the implementation of the new strategy of the NDA government and he has held extensive discussions with the oil exporting countries. India, as a major consumer of petroleum products and crude oil, is looking for special relationship with these countries so that India can get better terms for its purchases of petroleum products and crude oil and simultaneously get involved in the development of the oil fields in some of these oil rich countries so that a share of the production is meant for India.

Petroleum Ministry sources indicate that India is advantageously placed in the present global oil market in view of its status as the major importer. In 2014-5, India imported around 189 million tonnes of crude oil despite its own installed refining capacity of 215 million tonnes of crude oil per annum, Official sources say that domestic consumption grew in 2014-15 by 3.14 per cent to total around 163 million tonnes. Sources point out that India’s expertise and high tech in oil refinery management is recognized by the oil rich countries and India can very well take advantage of this by negotiating with the oil and gas fields bearing countries to acquire oil and gas assets on mutually beneficial terms. Indian participation in their oil assets will be advantageous to them.

For India’s emerging energy policy, the collaboration with both the oil rich West Asian countries as also Russia and the central Asian countries, has assumed special importance. India is going to be a full member of Shanghai Cooperation Organisation (SCO) which includes Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan, apart from Russia and China. All the central Asian countries have good oil and gas reserves and India with its high class exploration technology can help these countries in the development of their oil fields better compared to the western companies. Indian government is now actively exploring this possibility within the framework of SCO. (IPA)