In a move to get relief from oil price hike, India has proposed a grand alliance with top Asian oil buyers like China, South Korea and Japan to negotiate better terms with sellers. Petroleum Minister Dharmendra Pradhan on Thursday said India would try to create a network with China, Japan and South Korea to take up issues like premium being charged from Asian buyers. "I see bigger cooperation between four big economies of Asia, ie; India, China, Japan and South Korea. India will try to create a network between these four economies," he told reporters at an industry event here.
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 the oil imports in the world.
"Why should biggest consumers pay more. Why should these countries pay more in name of Asian premium," he asked. "All the four major Asian economies should come together. And India will try to create a network for that within the four countries."
Earlier this month, India and China agreed to join hands to have a collective bargaining power against cartelisation of oil producers. So far, India has not been able to bargain better rates from the Gulf-based producers of the oil cartel, OPEC. Instead of getting a discount for bulk purchases, West Asian producers, such as Saudi Arabia, charge a so-called 'Asian Premium' for shipments to Asian buyers, including India and Japan, as opposed to Europe.
However, Prof Yoshiki Ogawa of Japan, the Asian Premium annually costs somewhere around $5-10 billion for Asian importers. Pradhan said like producers have a say in pricing and supply, consumers should also get a say.
This is India's third attempt to unite major Asian energy importers to beat the producers' cartel. The then oil minister Aiyar had in 2005 hosted two ministerial roundtables to impress upon the need for a reasonable oil pricing and getting rid of discriminatory Asian Premium — the first involved major Asian consumers such as China, Japan and South Korea and the other roped in alternative oil producers of North and Central Asia.
Aiyar proposed a common front on oil to China's National Development and Reforms Commission vice-chairman Zhang Xiaoqing. That proposal resulted in a memorandum of understanding in 2006 but it was lost in the complexities of bilateral ties. Another attempt for joint energy sourcing with Japan was made towards the end of the UPA Govt when M Veerappa Moily was the oil minister. It, too, failed to see the light of day. At the 16th International Energy Forum (IEF) ministerial meet earlier this month, India and China which together accounted for 17 per cent of world oil consumption last year, agreed to look for ways to leverage the combined size of their imports for a better bargain from West Asian crude producers.