High oil prices hurting growth: PM

NEW DELHI: Prime Minister Narendra Modi has warned oil producers like Saudi Arabia that high crude prices are hurting the global economy as he sought reasonable rates and a review of payment terms to provide a temporary relief to the local currency.
India, the world’s third-biggest oil consumer, has been over the past two months battered by high crude oil prices that have sent retail petrol, diesel and LPG rates to record high, posed inflationary risks and together with a sliding rupee threatened to upset its current account deficit. Also, unrelenting fuel price rise since mid-August has negated cut in taxes and subsidy.
With Saudi Arabia Oil Minister Khalid A Al-Falih and a UAE minister listening, Modi at his third annual brainstorming with the chief executives of top global and Indian oil and gas companies underscored how crude oil prices at a four-year high were hurting global growth.

Sources privy to the deliberations said Modi also asked chief executives why no new investments in oil and gas exploration and production are coming to India despite the government implementing all the suggestions they made at the previous such meeting, sources said.
The meeting centred around boosting investment in upstream oil and gas production and how oil should be reasonably priced for both consumers and producers.

An official statement issued after the meeting said Modi noted that “the oil market is producer driven and both the quantity and prices are determined by the oil-producing countries”.
“Though there is enough production, the unique features of marketing in the oil sector have pushed up the oil prices,” it said quoting the prime minister. Consuming countries, he said, face economic challenges like serious resource crunch due to rising crude oil prices.
He made a strong case for a partnership between the producers and consumers in the oil market as it exists in other markets. “This will help stabilise the global economy which is on the path of recovery,” he said.
Also, oil producing countries should channel their investible surplus to pursue commercial exploitation of oil in developing countries, he said stressing on technological cooperation between producers and consumers.

“Lastly and importantly, he requested for review of payment terms so as to provide temporary relief to the local currency,” the statement said without giving details.”The Prime Minister asked Al-Falih what his cost of oil production was and why prices were rising so much. He said my cost is very high and If oil price is USD 40-50 (per barrel), we will start losing money,” Vedanta Group Chairman Anil Agarwal, who attended the meeting, said. “To this I said that my fields (in Rajasthan) are much worse than the oil-rich ones in Saudi Arabia but my cost is just USD 6 per barrel.”

Later speaking at the India Energy Forum, Saudi Oil Minister said Modi at the meeting raised the issue of “consumer pain” from high crude oil prices. “We heard it today loud and clear from prime minister (about consumer pain),” Al-Falih said.
He, however, said the “pain” would have been “much louder” but action by Saudi Arabia, the world’s largest exporter of oil, to invest in creating spare capacity has used to cushion price shocks.
“Prime minister cautioned producers like myself not to kill the hen that lays the golden egg,” he said referring to consumers as the golden hen. PTI