India: higher oil imports, tax cuts and a strategic petroleum reserve
India reports on crude oil imports (Emirates News Agency)
India's crude oil imports jumped by 23.3 % in July this year on increased demand for oil products, a senior Petroleum Ministry official said. Crude oil imports in July were 8.452 mm tons as opposed to 6.852 mm tons in the same month last year.
India's oil product demand increased by 3.8 % in July to 9.339 mm tons on back of a 13 % rise in diesel consumption to 3.411 mm tons. Diesel accounts for about 40 % of the total oil product demand.
Export of petroleum products declined marginally to 1.014 mm tons as against 1.145 mm tons in July 2003.
"This was mainly due to fall in diesel exports to 286,700 tons as compared to 412,100 tons last year," he said. However, export of petroleum products at 4.648 mm tons in the first four months of current fiscal was higher than 4.36 mm tons exported a year ago.
During April-July, crude oil imports surged 11.2 % to 33 mm tons as against 29.969 mm tons in the corresponding period the previous fiscal while exports of oil products rose by 6 % to 4.648 mmtons when compared with 4.36 mm tons in first four months of 2003-04.
Import of petroleum products increased 4 % to 693,100 in July and 1 % in April-July to 2.028 mm tons.
"This fiscal saw surge in diesel imports, mainly by a private sector firm (Essar Oil) for bulk and retail sales," the official said. Diesel imports stood at 12,300 tons in July and 61,000 tons in April-July.
India cuts taxes to ease pain of rising oil prices (VOANews)
India has lowered taxes on petroleum products to protect its economy from rising crude oil prices. As global oil prices climbed past $ 45 a barrel, the Indian government cut a range of duties on gasoline, kerosene and cooking gas. The measure is expected to curb inflation, which has climbed to 7.5 %, the highest in three and a half years.
The high inflation is being blamed on steadily rising oil prices in recent months, and deficient rains in parts of the country.
India imports about three-quarters of its crude oil, and the country's oil bill accounts for a third of the total value of all imports. Mahesh Vyas at the independent Centre for Monitoring of Indian Economy says surging oil prices will hurt industry and consumers.
"I see a substantial increase in the cost of production of manufacturing companies," he said. "It also impacts with a little delay the cost of living index, and I see a small increase in consumer prices as well because of this."
Nevertheless, high prices have not cut demand, and oil imports this year are expected to rise by 10 %. But investment firm J.M. Morgan Stanley warns that a $ 5 rise in crude oil prices in a year can shave growth by a quarter percent in India.
Many economists say the weather is as much a cause for concern as oil prices. Heavy rains in eastern India have triggered floods, but the monsoons have arrived late in several key food-producing regions in the west and the north. That is expected to hurt rural incomes, and slow consumer demand. Last year, ample monsoon rains gave the country a record farm output, and helped push economic growth to over 8 %, second only to China's.
India is expected to remain among the world's fastest growing economies this year, growing at between six to 7 %.
India to build up storage of crude oil (Islamic Republic News Agency)
Indian Government has decided to build strategic storage of crude oil of 5 mm tons capacity to ensure energy security for the country.
"This storage would be in addition to the existing storage of crude oil and petroleum products with oil companies and would provide emergency response mechanism to oil supply disruptions," Mani Shankar Aiyar, Indian minister for petroleum and natural gas, told the Rajya Sabha (Upper House of Parliament).
In reply to a question whether a Group of Ministers on Integrated Energy Policy is weighing alternate options, Aiyar informed that Government has set up a committee under the chairmanship of minister of power and with minister of petroleum and natural gas as co-chairman to address issues relating to Energy Policy.
The Committee would go into short, medium and long-term, policies and review such policies ranging across sectors, fuels and regions to enhance the country’s energy security.
On production of crude oil, he said, during the year 2003-04, Indian import dependence to meet the domestic demand of petroleum products was 70.7 %. During the year 2003-04 and April-June, 2004, 33.73 mm tons and 8.519 mm tons of crude oil was respectively produced indigenously.
During the period 2003-04 crude oil imports stand at 90.434 at a value of $ 18,268 mm against April-June 2004 crude imports of 24.548 mm tons at a values of $ 6,488 mm.
To reduce/check the oil import dependence, the Indian Government has taken few steps which include efforts made to increase the production of crude oil and gas by increasing the exploration efforts through the New Exploration Licensing Policy. Improving the recovery factor from the existing major fields by implementing Enhanced Oil Recovery (EOR)/Improved Oil Recovery (IOR) schemes.
Exploring new areas, especially in deep water and difficult frontier areas, as also exploring in the deeper layers of the producing fields. Faster development of newly discovered fields and increased use of new technologies for seismic survey, work over, simulation operations, drilling of wells etc. in producing areas.