India’s import of crude and liquefied petroleum gas (LPG) from Saudi Arabia is going to increase in coming years, according to an Indian minister.
Answering questions from Saudi Gazette, Dharmendra Pradhan, Indian minister of state for petroleum and natural gas, who arrived in Riyadh on Monday for a three-day official visit for the second round of Saudi Arabia, India Energy Consultations, said the Kingdom is an important pillar of India’s energy security.
“One of the objectives of my visit is to find ways to enhance and diversify our nature of energy relationship with Saudi Arabia. We want to move up from present buyer-seller relations to an interdependent energy partnership,” said Pradhan, who held talks with Saudi Minister for Petroleum and Mineral Resources Ali Al-Naimi and Assistant Minister for Petroleum and Mineral Resources Prince Abdul Aziz Bin Salman on wide ranging issues related to cooperation in the hydrocarbon sector between the two countries.
“As you know we are a rapidly growing economy and the requirement of crude is increasing in India with economic growth and with enhancement of refining capacity. The estimate is that crude requirement is going to double by 2030. The new government aspires for double digit growth rate which would enhance our energy requirement considerably and we look forward toward our reliable partners like Saudi Arabia,” said Pradhan, who is the first minister of the Narendra Modi government to visit Saudi Arabia.
He said Saudi Arabia is India’s largest source of crude import, presently amounting to over 20% of the country’s total import.
The minister said that India is enhancing its refining capacity with the objective to become a regional hub for refined products.
“There is good scope of Saudi companies to invest in Indian Refinery and petrochemical projects. We had constructive discussion with the Saudi side on this issue.”
In Riyadh, Pradhan and his accompanying delegation visited Saudi Arabian Basic Industries Corporation (SABIC) and King Abdullah City for Atomic and Renewable Energy (K.A.CARE).
On Wednesday, Pradhan visited Saudi Aramco headquarters in Dharan before departing for New Delhi.
He said India is bringing a series of reforms in the existing regulations to expedite exploration and production of hydrocarbons in blocks already leased.
Last week Government introduced a new progressive gas price formula which will incentivize production of gas in difficult geologies.
“There are provisions for premium for gas production from deep, ultra-deep, high temperature high pressure fields. Moreover the new pricing regime gives more incentives to investors in this sector.”
The minister said that as per the new gas price formula, gas price has increased by 33%; from the level of $4.2/mmbtu to $5.61/mmbtu on Net calorific value and not by 47% to $6.17/mmbtu.
“The government has tried to balance the interests of both producers as well as consumers. While we have attempted to incentive the production, we have also ensured that consumers are not unduly burdened.
“The bottom-line for us in any reform measure is to ensure that the poor and common men of India get the maximum benefit out of this.
“We are aware that Indian people cannot afford a price at present that the advanced economies can. Keeping this in mind the new Government under the leadership of Prime Minister NarendraModi re-examined the gas price agreed earlier and made it more affordable to the common people of India.”
He said India is going to benefit from the declining oil prices and diesel deregulation.
“This is evident from the declining under-recovery burden. The under recovery for 3 controlled products during 2013-14 was US$ 22.67 billion. For 2014-15, after diesel de-regulation, it is estimated at U.S.$ 13.96 billion only,” Pradhan said.