The October average price for crude was even steeper than the September average and in November oil prices show no signs of relenting. The $25.92 peak at the North Sea Brent this month and $24.47 price reigning at the Arab Gulf are a sure pointer that the Opec (Organisation of Petroleum Exporting Countries) and Mexico would adamantly adhere to the pledged production cut-backs.

As the crude oil taps remained turned off, India's projection for this year's oil import bill surpassed earlier estimated by $3 billion to touch $12.55 billion (Rs 54,000 crore). During the year of low oil prices in 1998-99 (ranging between $9 and $11 a barrel), the country's oil bill was $5.58 billion (Rs 24,000 crore).

The import billinitially got a fillip from the higher crude requirements of the greenfield refineries that went on stream, primarily Reliance Petroleum's 27-million tonne refinery at Jamnagar and Indian Oil Corporation's six million tonne refinery at Panipat. The more than 100 per cent jump in crude prices during the year finally acted like a match struck near a firecracker.

The oil bill soared. Even the $12.55 billion import bill projection may prove a conservative estimate if the crude oil spurt continues, as it seems poised to do. Obviously, something needs to be done and done fast.

Think-tanks in government and industry, who meet every week at a forum called the Empowered Standing Committee, have a strategy for combating the ballooning oil bill up their sleeve. Mum's the word in the oil grapevine the strategy itself is not clear at the moment, especially since the laws of the land do not allow canalising agency Indian Oil Corporation (IOC) to indulge in either currency risk hedging (beyond a point) or forwardtrading. Indian Oil attempts a form of currency risk management by procuring nearly half its imports of crude oil and petroleum products through suppliers' credits. That way oil imports do not depress the country's foreign exchange balance beyond a limit. The company arranges more than $ 600 million of suppliers credits a month.

A reduction in import duties on crude (and Union petroleum and natural gas minister Ram Naik has set December as a deadline for bringing duties down,) could bring some relief to oil refineries but will not help bring down the foreign exchange outgo. In the first four months of this year crude oil and petroleum products accounted for more than half the country's import bill. At the moment most of the country's crude oil and petroleum products are imported through long-term contracts. The term contracts are usually between Indian Oil Corporation and corresponding national oil companies of oil exporting countries, for a period of a year.

Most of India's crude and petroleum productsnow come from the Gulf, which is the closest source. Indian Oil also invites monthly tenders from oil exporting agencies in the Oil Coordination Committee's mailing list, which includes oil majors and traders apart from national oil companies of oil exporters. Purchases through both term contracts and monthly tenders are at market related prices prevailing at the time of loading.

The West Asian crude, which makes up almost half the oil refined at home hovered around $24.47 a barrel last week, a $3-jump from the October average price of $ 21.50 a barrel in the Arab Gulf. Dubai crude was trading for $23.22 a barrel in the second week of this month, compared to the October average price of $21.47 a barrel. Spot prices in Oman averaged at $23.35 a barrel too, compared to the October average of $21.53 a barrel.

The benchmark North Sea Brent touched $25.09 a barrel this month, a $3 spurt from the October average price of $22.01 a barrel. Forward contracts for December delivery were even higher, indicating thetrend oil prices will follow in the months ahead.