Low Global Prices To Cut Oil Import Bill By $1 Bn

Subdued international prices coupled with lower than projected demand is likely to prune the oil import bill during 1997-98 by $1 billion, petroleum ministry officials said.

Against the projected import bill of over $10 billion for petroleum and allied products, estimated in the oil economy budget, it is now likely to be around $nine billion, officials said.

To take advantage of lower price trends, the government is increasing the import of crude oil and cutting down on costlier petroleum products, they said. For the full utilisation of the countrys refining capacity, crude import is being maximised, they said.

It is estimated that petroleum product imports could be lower by about one to one and a half million tonnes during the year.

 

Asked about the recent uptrend in international prices in the wake of recent developments relating to Iraq, they said we are constantly watching the price scenario and feel that prices may start dropping soon.

Against an average crude import price of $20.63 per barrel during 1996-97, international prices dipped below $13 per barrel during the year and are now hovering around $15 per barrel.

The officials said that demand for petroleum products would be sizeably lower than projected in view of subdued industrial growth, but declined to give details. However, the changes in international prices are already reflected in the selling prices of products like naphtha, fuel oil, LSHS and diesel, they said.

Last month, the government announced a cut in the prices of intermediate fuels like naphtha, fuel oil and LSHS, as per the import parity price mechanism.

Alongwith domestic production of over 33 million tonnes, crude import requirement for the year was pegged at about 34 million tonnes, valued at over $4.9 billion, industry sources said. Likewise, requirement of imported petroleum products was estimated marginally below 25 million tonnes, valued at about $5.2 billion.

Thus the total oil import estimate stood at $10.1 billion against the actual outgo of $8.87 billion in 1996-97. Against a consumption growth of 6.4 per cent in 1996-97, demand was estimated to grow by 11.7 per cent. industry sources said.