India is comfortable near $70-a-barrel crude price: Oil minister Hardeep Singh Puri

Amid uncertainties in the energy market in the past few years due to geopolitical tensions, Hardeep Singh Puri, the Union minister for petroleum and natural gas, said there is a need to ensure predictability and stability in the oil market and prices of the commodity. He noted that the current price level of around $74 per barrel is good for India, but given that it is a major consumer, a price rationalization to $70 would be even better. Amid geopolitical tensions and the Opec+ grouping’s persistent output cuts, Puri said that no single country can drive prices independently in the current scenario.

Edited excerpts:

In the current geopolitical scenario with narrowing discounts from Russia, how is India placed vis-a-vis Russia, which has emerged as the top supplier due to the initial deep discounts it offered?

Russia was producing the amount it is producing much before the Russia-Ukraine issue took place. When I was in Russia (in September 2021), our imports were 0.2%. Then it (the Russia-Ukraine conflict) did not start. I told them if your prices are correct, then we can buy more from you. They (Russia) are giving discounts. You have a certain supply. You have to sell it. You are talking about discounts, but still, we are buying about 34% from there.

Do you expect crude prices to be in a $60-per-barrel kind of range?

It shall not be around $60 for a simple reason. For prices to come to $60, you just need some other things taking place. Some economies’ demand is satiated. They can’t buy more. Some economies have energy poverty. They can buy more if it is affordable.

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If you bring it down to $60, I mean, this is what happened during the pandemic. Suddenly, the price dropped to $19.56 a barrel, and what happened after that...then suddenly (prices) shot up to $128. So, my understanding as a layman who is now a minister for three-and-a-half years is that what you want is predictability and stability within a range.

What is the range that you prefer?

My preferred range may not be yours, but I think something close to $70 is good. However, some oil producers will be happier if the rate is $85.

If prices go down to $60, many will stop producing, and if they stop producing, the price will shoot up. That’s not in my interest. I would rather make economic decisions within a range. The current situation is good; if it comes down from $73-74 per barrel, it’s even better.

I have a very limited responsibility. There should be no lack of availability, affordability (of energy) and sustainability.

Now, the oil market is not in the hands of only one individual or country. Brazil is an Opec member, but it does not agree to the production cuts. It is producing 3 million barrels (per day) and bringing 1.5 lakh barrels more.

BPCL (Bharat Petroleum Corp. Ltd) has recently bought 1 million tonnes of oil from Argentina, which we didn't procure earlier. Earlier, we bought from 27 countries; now, it’s 40 (countries).

Going ahead...newer supplies will come. I am not worried about the price because a discount is also a reflection of the other person's need to market.

With the Prime Minister’s visit to the US, what are the expectations on the energy front, given that we are one of the largest consumers of energy?

First and foremost, let me give you a layman’s understanding of energy. Then, I will tell you that I have three-and-a-half years of experience, so I can add something which comes after you’ve been on the job. My layman’s understanding of energy is that economic activity, the growth of economies and energy are intrinsically linked.

You cannot have a situation of one without the other. If there is energy poverty or energy non-availability, you will have the economies come to a grinding halt or you will have social turmoil. And if you are a democracy of the kind that India is, then this is not an option.

It’s imperative that you ensure that energy is available to the bulk of your population at all times. Where are we vis-à-vis the US? My position has not changed. At the height of the other administration, the US was still producing energy. We were still buying $20 billion worth of energy from the US. One year it came down to $14 billion, and it went up to $20 billion again, but we were buying.

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I said we were already buying oil worth $20 billion. If you ask me, as a layman, I’d be surprised if there isn’t a discussion on energy. You’re already buying $20 billion worth from them.

Heads of state and government meet on policy. They don’t meet on commercial transactions. If more LNG (liquefied natural gas) is to be bought, our companies will talk to their companies, which they’ve already been talking to for a long time.

If you had been present in the US-India Business Council (USIBC) discussion, you would have seen the massive turnout. This is the main theme of most of their CEOs. India is the premier global opportunity in energy. Many of them are energy companies. Some of them are upstream, some are into technology, and some are into financing. So, this is how the mood was in that huge roundtable. So, yes, my answer to your question is energy will continue to be a very strong component of the India-US relationship.

How do you see the availability of energy in the market amid the global scenario and persistent supply concerns?

Many Guyanas are waiting to be found in the Andaman Sea. More and more energy is going to be available all over the world. There are countries in Opec that, by virtue of not investing, have declining production levels. Even they are willing to and want to produce more. Some countries, especially the bigger ones, want to do that.

They will have to make up their minds. If the prices are stable, they might decide to bring their oil to take part in the growing opportunity.

You have been a major supporter of green hydrogen adoption. What is your view on the growth in that nascent segment?

My favourite story is green hydrogen. If the price of green hydrogen comes below $3 per kg, It will be a revolutionary change. Currently, we are importing $150 billion. If it comes down from the current $5.5-6.0 to $3, it will bring a revolutionary change. There would be public pressure to stop fossil fuels and go for more green hydrogen. Now, our target is 5 million tonnes by 2030. That target will not just become achievable, we will be much ahead of that.

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