Union Petroleum and Natural Gas Minister Dharmendra Pradhan talks to The Sunday Guardian.
From the third largest energy consumer in the world, India of late, has added another tag—“a hard bargainer” in the global oil markets. So much so that it has become the primary voice for reasonable oil pricing in the global oil market. Its growing stature worldwide came to light recently when US President Donald Trump’s administration waived sanctions and allowed India to import oil from Iran along with seven other big countries, including China, Japan and Korea.
Union Petroleum and Natural Gas Minister Dharmendra Pradhan credits India’s growing influence both in the US and in global oil markets to Prime Minister Narendra Modi’s “dynamic leadership”. “Under PM Modi’s leadership, we have engaged hard with oil producing countries to convey that the business-as-usual approach will not work any longer,” Pradhan told Maneesh Pandey, Senior Executive Editor of ITV Network in an exclusive interview. Excerpts:
Q: Mr Minister, you are in the news again! This time for petroleum prices gradually falling and promising to go down further. How do you see the emerging fuel price scenario amidst the buzz in the US that petroleum prices may dip further?
A: As you are aware, India is the third largest energy consumer in the world after China and the US. Energy is integral to sustain India’s rapid rise. India offers a huge untapped energy market to the world. The government is taking all necessary steps to ensure affordable and sustainable energy for all.
The fall in global oil prices is a welcome change since it seems to be approaching its reasonable price. India has always called for reasonable and responsible pricing which balances the interest of both producers and consumers. The recent price spurt to over US$80 per barrel was harmful for major consumers like India due to their adverse impact on the consumers, current account deficit and overall economy. Our expectation is that the market should be kept sufficiently supplied by the OPEC countries as well as major oil exporters outside the OPEC so that crude finds a genuine market-determined price.
We have been advocating responsible pricing of petroleum products especially since the Indian market is highly price sensitive. To give relief to the consumers and the common man, government had reduced taxes on petroleum products in recent months. It is good that prices are in the range of $55-$65 per barrel at present. We would like it to remain in this range.
Q: Prime Minister Narendra Modi was much talked about within the Indian-American community and at the US think-tanks recently when the Trump administration waived sanctions on India along with seven other countries, including China, Japan, Korea, allowing it buy oil from Iran. Is there a bigger message in this waiver, which came as a big relief for India?
A: All the initiatives of Prime Minister Narendra Modi in the last few years have been taken positively globally. The commitment of the government in enhancing economic development, energy access, ease of doing business and promoting skill and entrepreneurship have been widely recognised. It has also been recognised that India is a responsible global player and a stabilising factor, both in the global economy and in the world of oil and gas sectors. It is in the interest of the global economy and consuming nations, like India, that the oil market remains stable. Waiver for Iranian imports is a constructive step in this context.
India, under the active leadership of PM Modi, has been championing the cause of diversification of our energy sources and to be mindful of the repercussions of the impact of high oil prices on developing countries, like India.
Q: Do you think that President Trump and PM Modi are going to determine “The Great Game” in Asia and Asia-Pacific along with strong allies like Japan, South Korea and Australia?
A: I don’t know how you interpret the term “The Great Game”. But I can share my views on how I see India’s role in the global energy dynamics as we go forward. Today, India has emerged as the world’s third-largest energy consuming nation. Earlier this year, IMF reported that India had overtaken France as the world’s sixth largest economy with a GDP of US$2.6 trillion. By all accounts, we are likely to overtake UK to become the fifth-largest within the next couple of years. So, the energy demand will only increase from here. But more importantly, India has been a reasonable and reliable buyer.
Under PM Modi’s leadership, we have engaged hard with oil producing countries to convey that the business-as-usual approach will not work any longer. And, I believe, the world has gradually taken notice. We have also engaged with fellow buyer countries—China, Japan, Korea—not only for crude purchase but also for co-operation in LNG purchase. Shale revolution in the US has turned America into an oil, and increasingly gas, producing superpower. Their producers are looking for markets.
India wants to diversify its crude and LNG sourcing. So, opportunities galore. We are not for or against any particular country or energy supplier. Nonetheless, it is my firm belief that global energy markets must promote win-win for both suppliers and buyers. That’s what, I feel, all countries must aim to achieve and work towards.
Q: What message has PM Modi given as head of the largest oil consuming nations to oil rich OPEC and other nations? Even President Trump joked in his Diwali message that “India (Mr Modi) is a hard bargainer”. Is that so?
A: If President Trump has gained that impression, well, I am not complaining. What’s wrong with India bargaining hard? Countries do it all the time. We have been advocating equitable terms and treatments in energy trade since long. PM Modi has urged oil producers to help import dependent countries like India to bridge the “resource crunch” which is a fallout of rising crude prices. He has also emphasised upon the need to move to responsible pricing, as also the need to move to transparent and flexible markets for both oil and gas.
Q: In the current oil dynamics, India is the largest energy consumer. How is India going to negotiate to get the best price possible to bring maximum benefit to Indian consumers?
A: India’s energy consumption is growing at the fastest rate among large buyers. We have embarked upon ambitious programmes for augmenting energy output from renewables, waste-to-fuel projects and bio-fuels. We have consciously pushed for increased diversity in our sourcing. The strategic reserves programme has gained momentum, we will have the capability to store crude and buy when prices are relatively moderate. Our companies were in China recently, exploring the possibility of forming an “oil buyers club”. The oil producing world knows all this. Hopefully, their response will be reasonable and prudent in the times to come.
Q: You lay a great thrust on gas-based economy to bridge demand-supply gaps and make “energy security mission” possible across India. What is the current status on that front and will it be a reality soon?
A: Yes, gas-based economy has been one consistent focus area for our government. Recently, ONGC reported its highest ever domestic natural gas production at 70 MMSCMD. Many reform measures have been undertaken to incentivize domestic gas production including that from difficult areas, CBM fields and ageing fields. We have pushed for CGD in a big way. The 9th Bidding Round has been very successful in terms of interest from companies and investors. Authorisations for some 85 Geographical Areas (GAs) have been given to various entities. The 10th Round covering 50 GAs spread across 124 districts is presently underway. We are laying natural gas pipelines in hitherto unconnected areas in Eastern and North-Eastern India. LNG regas infrastructure in the country is likely to double in size to about 55 MMTPA by 2022; in fact two new LNG terminals—one each on the west coast and the east coast—should become commercially functional within this financial year itself. We are working on setting up the first-ever Gas Trading Hub in the country. All in all, a number of good things are happening in the natural gas space in India at present. I am satisfied and excited about the future of natural gas in the Indian economy.
Q: Your interview cannot end without politics. So one from Madhya Pradesh, where you were the in-charge. How did the polls go? The Congress has been claiming loudly in its campaign that it is “bringing badlab (change)”. How much of that campaign slogan will help Congress?
A: The government under the leadership of Prime Minister Modi and the government at the state level, have done tremendous work for the welfare of the people and the development of the state. People have understood that PM Modi is the best person to keep leading the country. I am confident BJP will retain its position in the state.