Opec backs India to set up joint group
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.