Dubai: The current OPEC+ plan to increase oil production by 400,000 barrels per day each month will not be enough to bring down oil prices in the short term, said Tarun Kapoor, India’s Petroleum Secretary.
“Even if we go by their plan, the gap between demand and supply is going to remain for at least till the end of this year or maybe even early next year,” said Kapoor, during a visit to Dubai’s Expo 2020 event.
Kapoor noted that even with the existing agreement, several member nations were not able to meet their production quotas. “Some countries are not able to ramp up according to the quotas allocated to them, so the total increase is less than what OPEC declared.”
The world’s third largest crude oil importer was hit particularly hard by the second wave of the COVID-19 virus earlier this year and rising fossil fuel prices has threatened to upend India’s economic recovery.
“We are not saying that they should produce more than the demand, all we are saying is at least match up with the demand,” said Kapoor.
Rising prices of fuel coupled with a coal shortage has sparked concerns about inflation – an economic phenomenon where prices of basic consumer products shoot up.
“If there’s a short supply of coal or natural, then it has impact across the board,” said Kapoor. “We must ensure adequate supplies and we must try to keep the price level which is not only affordable, but understandable.”
Kapoor said that when Brent crude – the international benchmark for oil prices – dropped to $19-$20 a barrel last year, economists were predicting it to recover to $50-$55.
“No one said it would go up to $84 - as economies come back, and energy supplies are needed, we have to ensure that all the basic ingredients, which will ramp up economic activity, must be available at a reasonable price,” said Kapoor.
Looking for investments
India, which ships in more than 80 per cent of its oil requirements from overseas, has been looking for partnerships with global oil majors to monetise its reserves, located in offshore and deep sea areas. “Onshore, we are looking at some areas in Rajasthan and the southern part of India,” said Kapoor.
“We have good interest from some international companies - we had meetings with Schlumberger and Halliburton and some of the smaller companies too,” he added.