No pressure on purchase deals, says Reddy

India was not facing any external pressure on buying crude oil from Iran and would abide by UN sanctions only, not those imposed by any bloc of nations, Oil Minister S Jaipal Reddy said on Monday.

Speaking at the meeting of the Parliamentary Consultative Committee here, he said: “We respect UN sanctions but will not honour any other sanction. We have cordial relations with Iran and we continue to import oil from them.”

Reddy rejected US President Barack Obama’s statement that demand in China and India was responsible for spiralling international oil prices, and said that India’s per capita consumption at 442 kg of oil equivalent was much lower than world average of 1,715 kg. Geopolitical reasons are to be blamed for spike in global oil prices, he said.

“With the projected demand and supply gap, it is imperative for us to enhance energy security for the country for which intense efforts in exploration activities in India as well as abroad are being made.”

“India is currently world’s fourth largest consumer of energy accounting for 4.4 per cent of world’s annual energy consumption. USA, China and Russian federation are the top three energy consumers. Almost 40 per cent of the primary energy consumption is by USA and China,” Reddy said.

The US has imposed sanctions that deny access to the US financial system to any foreign bank that conducts business with the central bank of Iran. The European Union has agreed to ban oil imports from Iran starting July 1 as part of measures to stop the Persian Gulf nation’s nuclear programme.

The energy sector has witnessed major volatility in crude oil prices, scarcity of services and economic meltdown globally in the past few years. “Global demand for energy is oscillating in tandem with the economic condition of the world,” he said.

Economics in the energy sector is also being affected by the dynamics in global political situation, and economic sanctions regime leaving an adverse impact on the demand- supply situation. India is one of the fastest growing economies in the world. Presently, the domestic energy supplies are limited and the import dependence is as high as 80 per cent for crude oil and 25 per cent in case of natural gas.

“The situation may not change much in the 12th Plan period as the demand for oil and gas is increasing. The share of oil and gas in Indian energy basket is about 40 per cent,” Reddy said.