EXPLAINED INTERNATIONAL

Keeping India’s Energy Interest on Top – How Global Oil Powers are now Listening to India

Sometimes only negative trends make much noise. In recent days, petrol prices have been witnessing a cut and LPG prices have also seen a considerable reduction. Apparently, most of the critics who criticized the government when the prices went up, have been following a measured silence this time. The price of non-subsidized cylinder slashed by Rs 133 from December 1, 2018, is not a small respite for the consumer, considering the fact that India’s LPG cylinder coverage among households has reached 90% mark. Do all these price cuts in LPG and Petrol for Indian consumers have happened organically? The emerging evidence is giving us a picture of the Modi Government’s humungous backroom efforts with global players to facilitate this relief for Indian consumers.

As widely reported by the media, none other than Saudi Arabia’s Energy Minister Khalid Al Falih’s statement on November 6, 2018, suggests that the Prime Minister Narendra Modi’s pitch on behalf of the Indian consumers has been making a big difference. It is forcing the oil-producing countries like Saudi Arabia to regulate the crude oil prices. The Energy Minister was attending a meeting with the OPEC members where he was asked about American President Donald Trump’s view on oil prices. It is, therefore, even more interesting that while replying to that question he referred Prime Minister Narendra Modi’s effort as well.

He said,

We take the views of Prime Minister Narendra Modi seriously who is vocal about the issue. We met in Buenos Aires (during G20 summit) where PM Modi made it clear that he cares for Indian consumers and is very serious about it. I have also seen him at various energy events in India where he was very vocal.”

What Might Went Behind the Scene

The consistent effort by the Modi Government in safeguarding the Indian interest with regard to the oil prices has been evident all the while. Saudi Minister’s statement only gave it a kind of an official stamp. Let us look at the Indian Government’s recent efforts in safeguarding India’s energy interests.

  • Besides Saudi Arabia, Iran is also an important country on whom India depends on its oil import. When America re-imposed the sanctions against Iran on November 5, 2018, India was among the only few countries that had got a concession. This would not have been possible without the mammoth behind the scene effort by the Modi Government on the diplomatic table.
  • Taking forward that process, India had inked a deal with Iran to pay the import bill with Indian rupee currency. It is worth noting that India has inked a similar currency swap agreement with UAE, which also exports crude oil to India, to keep the dollar equation out.
  • At the time when America’s sanctions against Iran were still in the discussion stage, India was quick to engage with other oil producing countries to get ready for any eventuality. At that juncture, countries like Saudi Arabia and UAE had assured that they will ensure that India would not face any deficit in crude oil supply.

Here are some media reports from that timeline:

 

 

Using the Leverage

India’s relationship with the Arab nations has increased significantly under the Modi Government. The reason why oil exporting countries are now ready to listen and accommodate India’s view is that Prime Minister Modi appears to have succeeded in leveraging the power India has over these nations in a business sense like never before. Leveraging on the massive consumer base in India, the government is offering some good investment opportunities for countries like Saudi Arabia which is mutually beneficial for both India as well as for them.

Here are some reflections of that trend:

 

 

 

 

Conclusion

OPEC countries now ready to accommodate India’s concern along with USA, speaks volume about the India’s growing stake in the global market. The current government’s conduct in asserting India’s position and facilitating the trade deals which are mutually beneficial seems to be facilitating this trend.

 

Read our earlier article on India’s recent foreign policy moves:

India got Liberated from Bi-polar Geopolitics – What the Sanctions on Iran & S-400 Episodes Tell us

Read about the petroleum pricing policy under the current government:

Petroleum Pricing in India – The True Picture of UPA’s Disastrous Policies