India has raised the issue of global oil market price volatility with Russia that is hurting the interests of both consuming and producing nations. This was articulated by India’s oil minister Dharmendra Pradhan in a meeting with Russia’s energy minister Alexander Novak.
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India has been urging its long time ally Russia to take into account the interest of energy consuming nations during its engagement with the Organisation of the Petroleum Exporting Countries (Opec) at a time when the Opec plus arrangement including Russia has extended its compact for production cuts.
“Minister Pradhan also conveyed expectation that Russia, a member of the Opec Plus, can play an important role in balancing global oil market both in terms of ensuring adequate supply as well as in having a responsible and reasonable price.” India’s petroleum ministry said in a statement.
Any production cut by Opec and its allies has a wide-ranging impact on energy markets, given that Opec accounts for around 40% of global production. It is expected to have a particular fallout on India due to Opec accounting for around 83% of the country’s total crude oil imports.
India has been calling for a global consensus on “responsible pricing,” with China and India moving ahead to set up a joint working group (JWG) on energy to form a buyers’ bloc to bargain collectively for oil supplies.
This visit comes at a time when there has been growing uncertainty in the global energy market with tensions building up in the Persian Gulf after US President Donald Trump pulled his country out of a 2015 historic accord with energy-rich Iran that was inked to curb the Islamic Republic’s nuclear programme in return for ending sanctions. Also, factors such as falling production in Venezuela and geopolitical tensions have fuelled the uncertainty in international energy prices.
Pradhan’s visit comes ahead of Prime Minister Narendra Modi’s impending visit to Vladivostok. Modi is to attend the Eastern Economic Forum as well as the annual bilateral summit with Russian President Vladimir Putin. This is the 20th summit between the leaders of the two countries since the year 2000 when the mechanism was institutionalized. The meeting between Modi and Putin next week will be their third this year—previously they met on the margins of the Shanghai Cooperation Organisation meet in the Kyrgyz capital Bishkek and the G20 meet in Osaka.
“The two sides agreed to propose concrete recommendations including a roadmap and action plan for cooperation in oil & gas sector to the Eastern Economic Forum and 20th Annual Bilateral Summit between Hon. Prime Minister Shri Narendra Modi and President Putin,” the statement added.
This also comes against the backdrop of sanctions on Russia, where India owns stakes in significant hydrocarbon assets. Indian firms have invested $10 billion in acquiring stakes in hydrocarbon assets in Russia. Also, a consortium led by Russia’s Rosneft PJSC acquired Essar Oil Ltd for nearly $13 billion.
Modi’s visit has been preceded by the visits of Indian foreign minister S. Jaishankar and commerce minister Piyush Goyal along with by the chief ministers of Goa, Gujarat, Haryana and Uttar Pradesh, besides a 140-member strong Indian business delegation.