India eyes Opec meet for crude price outlook

India is keenly looking forward to the June 3 meeting of oil producers' cartel -- Organisation of Petroleum Exporting Countries -- in Beirut, the outcome of which will be the key input in formulating a new pricing policy for petrol, diesel, LPG and kerosene, Petroleum Minister Mani Shankar Aiyar said today.

"We are keenly watching the June 3 meeting of OPEC as it will decide key parameters of any decision (on revision of fuel prices necessitated because of a spurt in crude oil prices)," he told said.

Petrol and diesel prices have remained unchanged for the past five months despite raw material (crude oil) prices soaring by $6 a barrel and the new government wants to ensure that domestic consumers are insulated from the volatilities in international oil market.

Aiyar said the spurt in crude oil prices was a matter of deep concern and wanted Opec to act quickly to mitigate crisis in developing countries like India, dependent on imported oil.

He, however, was non-committal on the way domestic prices would move if Opec decided to hike output or international crude prices don't ease even after increased supplies.

"I am not in the business of making tomorrow's headlines. I will not like to speculate on prices. Let us wait for the Opec meeting as it will give us a short to medium term crude price outlook," he said.

Adding the government in close consultation with the state-run oil firms would devise a pricing policy.

The minister stated that the government was also considering a cut in excise duty on petroleum products and import duty on crude oil to check the impact of spurt in crude prices on domestic market.

"The decision they (Opec) take will show whether the recent steep rise in international oil prices is aberrant and transitory. As also whether greater stability at more moderate prices is the more likely prospect. This is such an important parameter for determining our approach to the domestic pricing," Aiyar said.

He did not comment on the possibility of extending subsidies on LPG and kerosene by two more years and asking state-run oil firms to bear part of the Rs 14,000 crore under-recoveries resulting from unchanged prices since April 2002.

"When we look at the whole pricing issue the fiscal regime forms a important aspect. And in deciding on a pricing policy, the fiscal regime (tax rates) will be looked into," he said, but did not state if the government could cut duties even before the Budget, due in early July.

Indian basket of crude oil which averaged $29.33 a barrel in the second fortnight of December, based on which the last price hike of Re 1 per litre in petrol and diesel was effected on January 1, had risen by $5.48 a barrel or 18.7 per cent to $34.81 a barrel in the first fortnight of May.

The import parity price, the benchmark for deciding the domestic price, of petrol has risen by 17.6 per cent and diesel by 19.8 per cent during the period.

Based on the spurt, public sector oil companies have been demanding a Rs 3.53 per litre increase in petrol prices -- from Rs 33.71 to Rs 37.24, and Rs 2.25 per litre in diesel prices -- from Rs 21.74 to Rs 23.99 per litre in Delhi.

Oil companies have lost Rs 900 crore on selling petrol and diesel below the cost this year.