India’s Minister of Petroleum and Natural Gas, Hon. Shri Dharmendra Pradhan on the Response to COVID-19, the Oil Price Collapse and India’s Energy Future

India’s Minister of Petroleum and Natural Gas and Minister of Steel, Hon. Shri Dharmendra Pradhan discusses his country’s efforts to combat COVID-19 and his views on how to balance energy markets in the latest edition of the CERAWeek Conversations series.

In a conversation with Daniel Yergin, vice chairman, IHS Markit (NYSE: INFO), Minister Pradhan describes the sweeping mobilization of resources to supply domestic fuel across the subcontinent and offers insight on the recent efforts by the G20, OPEC and others to balance global energy markets.

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Selected excerpts:

(Edited slightly for brevity only)

  • On the recent meeting of the G-20 and the stabilization of energy markets:

    “The G-20 meeting was a fruitful initiative. All the major stakeholders–whether they are producers or consumers–we all came together. We must have a sustainable roadmap for continuous energy supply. Energy security at this juncture is the primary requirement. We all have to work together. We have to be responsible, whether producer or consumer…and carry forward this historic responsibility we all have thrust upon to continue the energy ecosystem in the globe.”
  • On the need for “reasonable” oil prices:

    “We have to have a reasonable price. India is a major consumer. But at this juncture, India’s viewpoint is price should be reasonable and responsible. Very low prices are not the answer. Reasonable prices are the answers. Prices should give some space to the producer countries. It should be profitable for them; it should be viable for them.

    On the government’s efforts to expand access to LPG throughout India:

    “We launched Pradhan Mantri Ujjwala Yojana, the ambitious well-perceived scheme of Prime Minister Modi (launched in 2016) to provide free LPG connection to the bottom of the pyramid group. Prime Minister Modi decided to give free LPG cylinders in this juncture to the poorest of the pyramid group. To the normal consumer, our public sector petroleum companies are distributing five million LPG cylinders every day in the different part of the country.”
  • The state of the Indian oil and gas industry:

    “Since a few weeks back we decided to start our economic activities – the transportation activities, the industrial activities in the rural areas of the countryside of India. And gradually we are edging out from the lockdown. Our demand is picking up. Our refiners are facing severe inventory loss because all of our purchases from February, March, and April prices are not what they are today. So we have to pay the whole price. It’s a double burden. There’s a market loss and an inventory loss for our oil companies.”

    “I’m grateful to workers in the entire value chain in this present crisis over the last month and a half when the whole globe is at a standstill. They all are active. There is no disruption in the supply chain, though there is a huge fall in demand. Everywhere energy workers are playing an important role. They all are very active, they all are very fearless. I am very proud of our energy industry with this kind of challenge when people are very afraid for their lives and safety – their job is commendable.”
  • The state of India’s crude storage capacity:

    India has 5.3 million metric tons of strategic storage capacity. By mid-May it will be full. Apart from that our companies have 7 million metric tons of floating oil in their contracts. We have booked them, we have purchased them. Apart from that, with our domestic online capacity in crude oil or products we have storage of around 25 million metric tons. Put together, we have nearly 38 million metric tons of product and crude oil storage facilities. This is around 18% of our annual requirement of energy. This is the maximum capacity we could hold and we are holding that.
  • On longer-term energy policy priorities following national lockdowns:

    We are moving towards a new gas policy, a new tariff policy. We are planning for a gas exchange very soon and we will be liberalizing our distribution mechanisms. We are very much focused after relaxing this lockdown on the job of implementing the city gas distribution network expansion. It will give two things. One, it will create a long-term futuristic energy infrastructure in the majority of the country. Two, at this juncture we need more job opportunities, more employment generation and this is a perfect plan for our gas expansion story.
  • Beyond the COVID-19 crisis, a continued focus on imports reduction and the role of international companies in India’s upstream sector:

    “India has resources. We have opened up to policy reform our domestic sector. I am confident that when there is a resurgence in demand, domestic production will get priority and we are expecting a good amount of investment in that area due to our progressive policy.”
  • On the outlook for India’s steel industry:

    “All of the major steel plants and blast furnaces are on. There is a continuous production line. We don’t have to shut down the blast furnaces. They are all working. But there is low demand. The stockpile is increasing. But the way we are planning for the future roadmap – a lot of roads, a lot of value-added activities, a lot of infrastructure plans on the roadmap – in all of these areas steel will be required. In India there is the advantage where we are one of the cheapest steel producers on the globe due to our availability of raw materials and availability of low-cost manpower.”

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About CERAWeek Conversations:

CERAWeek Conversations features original interviews and discussion with energy industry leaders, government officials and policymakers, leaders from the technology, financial and industrial communities – and energy technology innovators.

The series is produced by the team responsible for the world’s preeminent energy conference, CERAWeek by IHS Markit.

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