Opec backs In­dia to set up joint group

The Times of India (New Delhi edition) - - TIMES BUSINESS - San­jay.Dutta@ times­group.com

New Delhi: Opec, the group­ing of oil ex­port­ing coun­tries, has agreed to In­dia’s pro­posal for set­ting up a joint work­ing group to asses fu­ture sce­nar­ios for the oil in­dus­try as en­ergy mix in ma­jor economies un­dergo rapid changes due to ex­pan­sion in re­new­able sources, oil min­is­ter Dhar­men­dra Prad­han told TOIon Thurs­day.

Prad­han pro­posed the joint work­ing group dur­ing the In­dia-Opec In­sti­tu­tional Dia- logue co-chaired by him in Vi­enna last week. The ac­cep­tance of the pro­posal by the group­ing, which ac­counts for nearly 40% of global sup­plies, is be­ing seen as an in­di­ca­tion of In­dia’s grow­ing im­por­tance in global mar­ket due to the com­bined ef­fect of its hunger for fuel and rapidly ex­pand­ing green en­ergy ca­pac­ity.

Seen in the back­drop of global oil prices drop­ping 3% on Thurs­day af­ter the group­ing ex­tended its de­ci­sion to cut pro­duc­tion by 1.8 mil­lion bar­rels a day — nearly half of In­dia’s daily de­mand — the move sig­nals that Opec has to con­tend with more than a ri- sing US shale in­dus­try be­fore it can re­gain its clout over the global oil mar­ket.

Bench­mark Brent crude dropped $1.6 to $52.4 a bar­rel as the mar­ket was dis­ap­pointed by the fact that Opec, while in­di­cat­ing it will ex­tend the out- put cut deal by nine months, did not deepen the re­duc­tion to ex­haust ex­cess sup­plies.

Dur­ing del­e­ga­tion-level talks with Opec sec­re­tary-gen­eral Mo­ham­mad Sanusi Barkindo, Prad­han po­litely but firmly told Opec to read wri- ting on the wall and ad­dress con­cerns of key buy­ers such as In­dia at a time when there were many op­tions in an over­sup­plied oil mar­ket.

Clearly, his ref­er­ence was not only to the on­slaught from the ris­ing pro­duc­tion from the US shale in­dus­try. It also pointed out the other chal­lenge Opec and the in­dus­try as a whole faces from re­new­able en­ergy. Prad­han men­tioned In­dia's chang­ing en­ergy mix due to the rapid ex­pan­sion in re­new­able en­ergy sources, which re­cently brought down so­lar power tar­iff to 4 US cents per unit-- or lower than the cost of grid power.

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