India Proposes Setting Up Asian Oil Buyers Network

India Proposes Setting Up Asian Oil Buyers NetworkIndia Proposes Setting Up Asian Oil Buyers Network

Union oil minister Dharmendra Pradhan has said India will create a network with other major oil buyers in Asia—China, South Korea and Japan—to negotiate better terms with sellers.

“Why should these four countries—India, China, South Korea and Japan—and its consumers pay more in the name of Asian premium. All the four major Asian economies should come together and India will try to create a network for that within the four countries,” Pradhan was quoted as saying by Indian Express.

India is the world’s third largest oil importer after China and the US. Japan is the fourth largest importer and South Korea is right behind it. The four nations account for over a third of world oil imports.

Earlier this month at the 16th International Energy Forum ministerial meet, India and China agreed to join hands to have a collective bargaining power against cartelization of oil producers and pitched for responsible pricing.

Even though India has repeatedly asked for discounts from OPEC, it has not succeeded in receiving any monitory help yet.

Instead, major oil producing nation, such as Saudi Arabia, charge a so-called Asian premium for shipments to Asian buyers, including India and Japan, as opposed to Europe.

According to Prof. Yoshiki Ogawa of Japan, the Asian premium annually costs somewhere around $5-10 billion for Asian importers.

The minister also said that the government is concerned about rising fuel prices but it must maintain a balance between fiscal and consumer interests. However, he did not give any signs of cutting down excise duty but said the government would intervene to ease the pricing pressure on consumers.

Ogawa urged the states to cut down VAT on the fuel.

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