• Friday, June 22, 2018

India, China move to challenge Opec's sway on oil prices

Discussion in 'World Affairs' started by surya kiran, Jun 13, 2018.

  1. surya kiran

    surya kiran SENIOR MEMBER

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    https://timesofindia.indiatimes.com...s-sway-on-oil-prices/articleshow/64578829.cms

    NEW DELHI: India and China, which together accounted for 17% of world oil consumption last year, are working on combining their shopping carts with a view to challenging Opec’s capability to play havoc with crude prices and seek better bargain from the cartel of oil exporting countries, especially its West Asian members.

    The two sides kicked off formal talks in Beijing on Monday for forming an oil buyer’s club, a development that is expected to weigh on Opec energy ministers who are expected to discuss a plan to end the production cut deal later this month.

    The talks come within less than two months of oil minister Dharmendra Pradhan proposing an alliance between Indian and Chinese state-run oil companies for greater say in the market.

    “As consumers, we have certain mutual interests. We agreed to promote B2B (business-to-business) co-operation ... and we are hopeful that in future buyers will be able to dictate prices,” Pradhan had said after meeting CNPC (China National Petroleum Corporation) chairman Wang Yilin and Li Fanrong, deputy administrator of China’s National Energy Administration, on the sidelines of the 16th International Energy Forum ministerial round in April.

    Pradhan, however, did acknowledge that there would be “fair competition in some areas as it happens in business”, an oblique reference to acquisition of overseas oil and gas fields.

    Sources told TOI that the two are looking at working together rather than competing. “The timing is right. The boom in the US oil and gas production gives us another leverage against Opec,” an official said.

    The talks are a throwback to 2005, when the then Indian oil minister, Mani Shankar Aiyar, proposed forging a common front to China’s National Development and Reforms Commission vice-chairman Zhang Xiaoqing on the sidelines of the Asian Round Table – a buyer-seller meet – hosted by India to seek reasonable oil pricing. That proposal resulted in a co-operation MoU in 2006, which was lost in the complexities of bilateral relations and faultlines within the UPA-1 government.

    This time, however, the move comes when the global oil market’s centre of gravity has shifted to Asia. International Energy Agency sees India and China fuelling half of global demand growth in the next five years, with India driving incremental demand growth through the next two decades.

    Monday’s talks between Sanjiv Singh, head of IndianOil, India’s largest refiner and fuel retailer, and top executives of Chinese oil companies looked at investing - either jointly or separately - in expanding US oil and gas export infrastructure, which is restricting higher exports to Asia. There was also Chinese willingness to invest in India’s gas import infrastructure.

    Also on table was the idea of Indian and Chinese companies jointly negotiating oil purchase wherever possible, just like the Indian state-owned companies are doing. Besides, India could also buy oil directly from Chinese companies that have equity in projects.

    “For example, China has equity Basra (a light Iraqi) crude. India buys large quantities of this crude. If Indian refiners buy directly from Chinese companies, the price will be competitive as the demand does not build into the trade. Every cent less means huge savings in oil import bill, given the volume of India’s imports -- 213 million tonne in 2017-18.

    Another major issue was the ‘Asian Premium’ – or a higher price – charged by West Asian oil exporters for shipments to Asian buyers, as opposed to Europe, has been the pet peeve. The hardening oil prices have amplified the effect. But exporters deny any premium, saying it is market dynamics, with each region having its own pricing norm. But how long they can stonewall world’s leading buyers is yet to be seen.
     
  2. somebozo

    somebozo ELITE MEMBER

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    I hope Pakistanis realize that its no longer deeper than ocean higher than himaliyas blank cheque..as combined policy on energy is a very solid partnership for the future
     
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  3. Hell hound

    Hell hound STAFF

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    we too should join hands with india and china on this one
     
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  4. randomradio

    randomradio SENIOR MEMBER

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    This was bound to happen. Not one oil buyer is happy with the current situation.
     
  5. Cybernetics

    Cybernetics FULL MEMBER

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    "deeper than ocean higher than himaliyas" never implied seeking to undermine a third party at every turn. More bargaining power for net oil importing nations would make sense. This would benefit Pakistan greatly as well.

    Some OPEC nations are adversaries but still cooperate on the grounds of economic interest. It makes little sense to "cut off the nose to spite the face".
     
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  6. Theparadox

    Theparadox FULL MEMBER

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    Isn't pak already buying oil from China?
     
  7. Kaniska

    Kaniska SENIOR MEMBER

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    Exactly...the way OPEC members join hands to control the oil price, in the same way, top Oil consumer nations should form a group and negotiate the purchase price from OPEC...Otherwise, Oil consumers will always be at the mercy of OPEC nations..

    I am sorry, i could not get your point...What do you mean by this post?

    China is not undermining any interest of Pakistan here...Why Pakistan should feel upset? Rather, Pakistan and other nations could join the group of Oil consumers along with China and India to increase the bargaining power while purchasing oil from OPEC..
     
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  8. INDIAISM

    INDIAISM FULL MEMBER

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    I think it will be alot if Japan and South Korea also become part of this alliance...They are among the top 10 importers of crude oil...
     
  9. Hell hound

    Hell hound STAFF

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    my point exactly challenge the opec dominance and make it a buyers market
     
  10. Ajaxpaul

    Ajaxpaul SENIOR MEMBER

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    The wild card here is USA. We need them on our side.
     
  11. Jackdaws

    Jackdaws SENIOR MEMBER

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    Trump concurs -

    <blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Oil prices are too high, OPEC is at it again. Not good!</p>&mdash; Donald J. Trump (@realDonaldTrump) <a href="">June 13, 2018</a></blockquote>
    <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
     
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  12. chander_011

    chander_011 FULL MEMBER

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    Hope the talks between India and China get the desired results. Later we can continue our friendship in other forums like nsg, uno etc
     
  13. Hell hound

    Hell hound STAFF

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    o_Oo_Oo_Oo_O
     
  14. Kambojaric

    Kambojaric SENIOR MEMBER

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    We should join them too. As should Japan, South Korea and other major importers. All of us are being done over by the artificial hike in oil prices. Apart from OPECs 2% cut in global supply, the decline in Venezuelan oil production and the new Iranian sanctions will only worsen the situation in the coming months which seriously hampers the GDP growth rates of all importers.
     
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  15. sputnik

    sputnik FULL MEMBER

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    Interesting News but it is having some "SPIN"

    1. SINOPEC i know is having Exploration projects in Middle East and have supplier base from India. So Chinese already drilling Oil for China their and Now They Join hands with India to bargain is something I don't understand.
    this news require few more disclosures. i know SINOPEC officials in Middle East but only as supplier only.

    2. Secondly, All Strategic Oil Reserves and now a huge Refinery is funded by Saudi And UAE govts. why they reduce price for us when they already putting real money in Economy.

    3. RUSSIA: the only dark horse in SCHEME of things in RUSSIA. Both India and China have many explorations blocks there and they are actual candidate to negotiate for Price.

    From Indian perspective apart from Iran, no other require to bargain or get into 1.

    Pak. will be better off to start buying Middle East oil from Sinopec. u can easily settle contracts in yuan with them as well and save Dollar.

    All oil wells in Kurdish region are owned by Reliance apart from those in Permian Basin USA. congress like Basra oil because of Natwar Singh. but Ain't any more.