OPEC output cut to shift buyers to new suppliers - Oil Minister Dharmendra Pradhan | Reuters

 OPEC output cut to shift buyers to new suppliers - Oil Minister Dharmendra Pradhan
| Reuters

By Dmitry Zhdannikov and Nidhi Verma

VIENNA/NEW DELHI India said on Monday OPEC production cuts and the prospect of more expensive oil were pushing the world's third biggest consumer to consider U.S. and Canadian suppliers, as well as encouraging it to turn to renewable energy resources.Indian oil minister Dharmendra Pradhan made the comments in a statement in Vienna where OPEC meets this week to decide whether to extend its production cuts to ease the global oil glut that had grown with the expansion of American output.The Organization of the Petroleum Exporting Countries had sought to undermine the North American oil boom for several years by raising output, which pushed prices too low for costly shale producers. But low prices also hurt OPEC states, encouraging them to change tack and limit output."We all know that the production cut is an attempt to arrest the slide in prices, however, it also has an inherent chance of under investment and consumer's needs not being met in the long run," Pradhan said in a statement.

He said India was in touch with suppliers it had not traditionally used and said Indian refiners were "working out details of the strategy to buy cargos, including from the USA and Canada, which happens to be becoming very competitive."India now imports 86 percent of its oil needs from OPEC states to meet its 4.6 million barrels per day (bpd) refining capacity. Pradhan said India planned to raise refining capacity to 6.2 million bpd by 2023.Pradhan also said OPEC producers should work towards a "responsible price" for oil and Asia should be treated on a equal footing with Western consumes.

"OPEC should treat Asian markets as primary markets. Its strategy of incentivising Western markets (with lower official selling prices) in the past did not result in retaining those markets," the minister said."India is very price sensitive. We want to be competitive in our domestic market. We want to source our crude oil from a competitive market, from every part of the world," he said.

He said India was expanding use of renewable energy, such as solar and wind, and encouraging electric vehicle use. "We need to realise that the oil industry is at a delicate cross road and higher crude prices will give a further push to renewables," he said.OPEC Secretary General Mohammad Sanusi Barkindo said after meeting Pradhan that OPEC estimated Indian oil demand would rise by more than 150 percent by 2040 to about to 10.1 million bpd, accounting for 9 percent of global demand from 4 percent now.India's per capita energy consumption was 0.55 tonnes of oil equivalent, far below the global average of 1.9 tonnes of oil equivalent, Pradhan said, adding energy consumption was expected to almost double by 2035. (Additional reporting by Promit Mukherjee in MUMBAI; Wrting by Nidhi Verma; Editing by Edmund Blair)

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Updated Date: May 22, 2017 16:41:29 IST