In what will help the country save anywhere between $3-5 billion (Rs18,000 to Rs30,000 crore) of foreign exchange every year, India has begun tough negotiations with leading oil producers and suppliers in the Gulf nations to do away with the Asian premium.
Asian premium is the extra cost that is currently being charged by producers from oil guzzling countries such as India, Japan and others.
Petroleum minister Dharmendra Pradhan told HT that during his recent visit to Saudi Arabia he pitched for doing away with this premium and sought better terms for crude imports.
India imports close to 190 million tonnes of crude oil every year and spent around $145 billion on oil imports during 2013-14. Gulf nations together supply over 60% of India’s crude oil imports. Oil supplies from the Gulf nations attract a premium of anywhere between $2 to 3 per barrel and is in-built in the cost of crude.
Saudi Arabia is the largest supplier of crude oil to India, which sources around 20% or about 40 million tonnes of its total crude oil imports annually from the gulf country.
“India’s huge refining capacity and increasing demand for crude oil makes it an important nation for most oil producers are willing to re-negotiate better terms for oil supplies to India….Also in the awake of fluctuating oil prices, India has already started looking at other sources of oil in Latin America, Africa, Canada, thereby forcing the oil suppliers of Gulf to give India the best possible deal,” the chairman of a leading oil company said, seeking anonymity.
“Besides doing away with the Asian premium, the minister sought delivery of crude at Indian ports at Saudi costs.”
Petroleum ministry officials said on the back of falling prices of crude oil in the global markets and reduced offtake of supplies to the US countries like India, China, Japan and other Asian buyers of oil are the preferred customers of oil producers in the Gulf.