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Import more crude grades to cut basket price: Parliamentary panel

2023-12-31 00:00:00.0 商业标准报-经济和政策原网页

The Parliamentary Standing Committee on Petroleum has flagged the need for importing a wider range of crude oil grades with the objective of reducing the cost of the Indian crude basket. In a recent report tabled in Parliament, it has also exhorted public sector undertakings in the oil sector to modernise their vintage refineries to improve their capabilities to process a wide variety of crude oil.

The Indian crude basket represents a derived basket comprising Sour grade (Oman & Dubai average) and Sweet grade (Brent Dated) of crude oil processed (indigenous and imported) in Indian refineries during the previous financial year. The same is presently calculated every month, on the basis of a weighting of 75.62 per cent for the price of sour grades of crude oil (average of Oman & Dubai) and 24.38 per cent for the sweet grade of crude oil (Brent Dated).

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While about 250 grades of crude oil are traded in the global crude market, Indian refineries buy only about 50 grades of crude oil in a year, the committee noted. However, the Ministry of Petroleum and Natural Gas has pointed out that the purchase of crude by oil PSUs depends on refinery configuration, seasonal demand, price of crude, required product, operational exigencies, etc.

The Indian crude basket is used as an indicator of the price of crude imports in India, and the government watches the index while examining domestic price issues.

Some industry insiders have called for changing the way the basket price is calculated, especially since it has yet to factor in the large volume of Russian crude that has been consistently imported by India since the war in Ukraine began. In May 2023, it became India's largest crude oil supplier, with 1.96 million barrels per day (mb/d).

The basket price is also higher since Middle East crude generally costs more due to the levy of an Asian premium. This is an extra amount levied by the Organization of the Petroleum Exporting Countries (Opec) on sales to Asian countries above the actual selling price.

The Ministry has stressed the number of crude oil grades imported is based on the technical and economic competitiveness of individual crude oil grades.

"Besides this, different grades of crude oil have different properties like sulphur, density, etc., which in turn produces different quantity and quality of products. These crudes are selected on the basis of refinery requirement, acceptability, and economics. Moreover, crude grades which are beneficial to the oil PSUs in terms of better refining margins are sought in the market," it told the committee.