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India discusses 'Oil Buyers Club' with China; seeks US crude to counter OPEC

Press Trust of India  |  New Delhi 

With producers' cartel playing havoc with prices, discussed with the possibility of forming an 'buyers club' that can negotiate better terms with sellers as well as getting more US to to cut dominance of the

As a follow up of Oil Dharmendra Pradhan's idea floated at the International Forum (IEF) meeting here in April, (IOC) travelled to this month to meet Wang Yilin, of National Corp (CNPC), a top source said.

On discussion table was debottlenecking infrastructure to facilitate more US comes to so as to cut the dominance of Organization of the Exporting Countries (OPEC), which supplies about 60 per cent of India's

Production cuts by have led to international hitting a four year high last month that forced a Rs 3.8 per litre hike in petrol and Rs 3.38 a litre increase in diesel prices. Rates started to cool towards month end and have been cut thereafter.

In a throwback to 2005 when the then oil had proposed an alliance of the oil consuming nations, Pradhan wants to form an with China, and South to take up issues like premium being charged from Asian buyers.

At the IEF meeting, and agreed to join hands to have a collective bargaining power against cartelisation of Singh's visit was to take this forward with concrete proposals for cooperation, the source said.

So far, has not been able to bargain better rates from the Gulf-based producers of the oil cartel, Instead of getting a discount for bulk purchases, West Asian producers, such as Saudi Arabia, charge a so-called 'Asian Premium' for shipments to Asian buyers, including India and Japan, as opposed to According to Prof of Japan, the Asian Premium annually costs somewhere around USD 5-10 billion for Asian importers.

The source said possibilities of joint sourcing of oil as well as combined bargaining to bring down Asian premium was discussed. Similar collaboration will be proposed to and as well.

With CNPC or its affiliates selling in the overseas market a large portion of oil produced from fields it owns in third countries, India expressed interest in buying the Chinese firm's directly, the source said.

India is the world's third-largest after China and the US. is the fourth largest importer and South is right behind it. The four nations account for over a third of the in the world.

"Why should biggest consumers pay more. Why should these countries pay more in name of Asian premium," Pradhan had said in April. "All the four major Asian economies should come together. And India will try to create a network for that within the four countries."

He had stated that like producers have a say in pricing and supply, consumers should also get a say.

This is India's third attempt to unite major Asian importers to beat the producers' cartel.

The then oil Aiyar had in 2005 hosted two ministerial roundtables to impress upon the need for a and getting rid of discriminatory Asian Premium -- the first involved major Asian consumers such as China, Japan and and the other roped in alternative of and Central

Aiyar proposed a common front on oil to vice- That proposal resulted in a memorandum of understanding in 2006 but it was lost in the complexities of bilateral ties.

Another attempt for joint sourcing with Japan was made towards the end of the when M Veerappa Moily was the It, too, failed to see the light of day.

At the 16th IEF ministerial meet in April this year, India and China, which together accounted for 17 per cent of world oil consumption last year, agreed to look for ways to leverage the combined size of their imports for a better bargain from West Asian crude producers.

By 2023, will hit 104.7 million barrels per day, up 6.9 million bpd in 2017, according to the "As has been the case for some years, China and India together will contribute nearly 50 per cent of global oil demand," the agency had said in a report.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, June 13 2018. 16:40 IST