PM Narendra Modi appeals oil producers to review ‘payment terms’ with India in the wake of Rupee’s slide

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New Delhi | Updated: October 16, 2018 2:11:27 AM

He warned oil producers like Saudi Arabia that high crude prices are hurting the global economy.

Rupee has fallen by nearly 14% in the last one year

Prime Minister Narendra Modi on Monday appealed to oil producing countries and global energy giants to review the ‘payment terms’ with India so that the rupee, which has fallen by nearly 14% in the last one year, gets some support. He also urged them to divert more of their investible surpluses to the country so that the country’s oil production gets a fillip.

Although a government statement did not spell out what the payment terms sought by Modi were, sources said he meant greater facility for Indian crude importers to pay their overseas suppliers in rupee rather than dollar.

Highlighting that consumer countries are facing economic challenges due to high crude prices, Modi emphasised that cooperation of the oil producing countries would be very critical to bridge the resource gap the country was witnessing on account of costlier crude.

He warned oil producers like Saudi Arabia that high crude prices are hurting the global economy.

Quoting sources privy to the deliberations, PTI reported Modi also asked chief executives why no new investments in oil and gas exploration and production are coming to India despite the government implementing all the suggestions they made at the previous such meeting.

He made a strong case for a partnership between the producers and consumers in the oil market as it exists in other markets. “This will help stabilise the global economy which is on the path of recovery,” he said.

India has been hit by both rising crude oil prices and a weakening rupee which have also resulted in sharp spike in domestic retail auto fuel prices. While the retail fuel prices are determined taking into account international product prices, these prices move in tandem with crude oil prices.

Modi held a meeting with government functionaries and corporate heads who are here to attend the two-day conference organised by IHS Markit. He met Saudi Arabia energy minister and chairman of Saudi Aramco Khalid A. Al-Falih, UAE’s minister of state and ADNOC CEO Sultan Ahmed Al Jaber and chiefs of companies such as BP, Rosneft and Schlumberger among others. The meeting was also attended by the heads of Indian oil companies apart from Indian petroleum minister Dharmendra Pradhan and finance minister Arun Jaitley.

India’s problems seems to be compounding as the impending sanction on Iran by US with effect from November 4 is making crude oil imports from Iran — the third-largest supplier to India — difficult. Recently Indian refiners sought additional four million barrel of crude oil from Saudi Arabia in November, a move that might partly compensate for any fall in their imports from Iran.

India’s oil imports from Saudi Arabia have been to the tune of 25 million barrels per month in recent past.

Saudi Arabia was India’s second largest source of oil imports in FY18, accounting for 15% of the country’s overall oil imports; Iraq is the top crude oil exporter to India with a 20% share in India’s overseas oil purchases.

Later in the day, Saudi Arabia’s Al-Falih while speaking at the conference assured that the West Asian country will support India to fulfil its oil requirements. “My frequent visits to the country (India) indicates the importance Saudi Arabia gives to it. I assure continued support to meet India’s oil demand and investments,” said Al-Falih.

Supporting India’s position as a major importer of crude oil, UAE’s Al Jaber also said that his country is ready to engage with India and if need be, step up its spare capacity to meet India’s demand.

Modi also urged the global leaders to increase acreage under exploration and sought cooperation of the developed countries both in terms of technology and extension of coverage. He also sought the role of private participation in the distribution of gas sector.

India’s first round of Open Acreage Licensing Policy which offers a liberal revenue-sharing mechanism saw no participation from foreign entities. A total of 55 fields went under the hammer in the first round and the second will see 14 fields being auctioned.

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