Lok Sabha Question No. 109 (STARRED), answered on 2023-02-09
Subject: Brent Crude Oil Price
Ministry: PETROLEUM AND NATURAL GAS
Asked by: D. M. Kathir Anand, Anurag Sharma

## LOK SABHA

## STARRED QUESTION NO. 109 TO BE ANSWERED ON 09 FEBRUARY, 2023

## Brent Crude Oil Price

## *109.   SHRI D.M. KATHIR ANAND: SHRI ANURAG SHARMA:

## पेोलयम और ाक ृतक गैस मंी

Will the Minister of PETROLEUM AND NATURAL be pleased to state:

(a)  whether  it  is  a  fact  that  the  Energy  Information  Administration  (EIA)  forecasts  that  Brent crude oil prices will average $95.33/b in 2023 and West Texas Intermediate (WTI) forecasts to average $87.33/b in 2023 and if so, the details thereof and India's import plans for Brent crude oil and WTI sources;

(b) whether the Government has made any efforts to bring down the prices of Petrol/Diesel/LPG/CNG/ LNG in the country and if so, the details thereof; and

(c) the innovative measures to be adopted by the Government to reduce the heavy burden arising out of its huge import obligations?

## ANSWER

## पेोलयम और ाक ृतक गैस मंी

( ी हरदप संह पुर )

## MINISTER OF PETROLEUM AND NATURAL GAS (SHRIHARDEEP SINGH PURI)

(a) to (c): A statement is laid on the Table of the House.

## Statement referred to in reply to parts (a) to (c) of Lok Sabha Starred Question No. 109 asked  by  Shri  D.M.  Khathir  Anand  and  Shri  Anurag  Sharma  to  be  answered  on  9 February 2023 regarding 'Brent Crude Oil Price'.

(a) The price of crude oil in international markets is based on the demand supply scenario, geopolitical  issues  and  various  other  market  conditions.  It  is  difficult  to  make  accurate predictions about crude oil prices, specially amid ongoing volatility. India is majorly dependent on  crude  oil  imports  to  meet  its  domestic  requirements.  Public  Sector  Oil  Companies  finalize their  crude  oil  requirements  annually  based  on  techno-economic  analysis  of  the  petroleum products'  demand  and  evaluation  of  various  crude  oil  supply  sources  through  annual  term contracts as well as short term spot contracts. During this procurement of crude oil through Term and Spot contracts by the OMCs and standalone refineries, various compatible grades of crude oil  available  in  the  international  market  (including  crude  oils  benchmarked  to  Brent/WTI)  are contracted out.

(b) Prices  of  petrol,  diesel  and  LPG  in  the  country  are  linked  to  the  prices  of  respective products in the international market. Retail prices of petrol and diesel in the domestic market have been market-determined with effect from  26.06.2010 and 19.10.2014 respectively. Since then, the Public Sector Oil Marketing Companies (OMCs) take appropriate decision on pricing of  petrol  and  diesel.  However,  to  insulate  the  consumers  from  wild  fluctuation  in  respective international product prices, public sector Oil Marketing Companies (OMCs) have not increased prices of petrol and diesel since 6 th April 2022.

Due to high volatility and elevated prices of crude oil, most of the developed countries have been reeling  under  high  Petrol  and  Diesel  prices.  For  example,  in  the  US  the  prices  of  Petrol  and Diesel  increased  by  about  6%  and  42%  respectively  over  the  period  December  2021  to December  2022,  whereas  prices  in  India  (  Delhi)  decreased  by  7%    in  case  of  petrol  and increased by only 3 % in case of diesel, during this period.

Central Government has reduced Central Excise duty by a total of Rs. 13/ litre and Rs. 16/ litre on petrol and diesel respectively in two tranches in November 2021 and May 2022. The excise reduction of May 2022 was fully passed on to consumers and retail prices fell as a result.  The measure was aimed to give a further fillip to the economy and to boost consumption and keep inflation  low,  thus  helping  the  poor  and  middle  classes.  Subsequently,  many  States/UTs  have also reduced VAT rates on petrol and diesel.

The average Saudi CP prices on which the domestic LPG prices are based, increased from US$ 454/MT to US$ 693/MT during 2019-20 to 2021-22.  During 2022-23 the average Saudi CP has further risen to US$ 710 /MT till February 2023. However, RSP of Domestic LPG Rs./14.2 Kg Cylinder  (Delhi)  at  the  end  of  FYs  from  2019-20  to  2021-22  have  been  Rs  805.50/Cyl,  Rs 819/Cyl, Rs 949.50/Cyl respectively and Rs 1053/Cyl as on 31.01.2023.

Government continues  to  modulate  the  effective  price  to  consumer  for  domestic  LPG.  Public Sector  Oil  Marketing  Companies  have  suffered  huge  losses  on  sale  of  domestic  LPG.  To compensate  these  losses,  the  Government  has  recently  paid  a  one-time  compensation  of  Rs. 22000 crore to OMCs.

The prices of Compressed Natural Gas (CNG) in any location is fixed by the authorised City Gas Distribution  (CGD)  entity  after  considering  cost  of  gas  procured,  State  taxes,  tariff  and  other components.

LNG (Liquefied Natural Gas) is imported by various natural gas consumers, marketeers etc. on long  term  contracts  and  in  spot  markets.  The  prices  of  LNG  are  commercially  agreed  upon between buyer and seller in the international market. However, to reduce the impact of increase in  international  gas  prices  on  CNG  prices  in  India,  Government  has  taken  various  steps, including, increasing domestic APM gas allocation to CNG(Transport) and PNG (Domestic) by about  250%  of  the  allocation  in  2013-14,  diverting  domestic  gas  from  power  and  other  nonpriority  sectors  to  meet  the  requirements  for  CNG  (transport)  and  PNG  (domestic)  segments, declaring CNG(T)/PNG(D) segment as the first priority for allocation of domestic natural gas. While the gas prices in the international market (JKM) have increased by 327% between January 2021 and November 2022, in India, the CNG prices (Delhi) have increased by only 84% during the corresponding period.

(c) Government has adopted five-pronged strategy comprising increasing domestic production of oil and gas, promoting energy efficiency and conservation measures, giving thrust on demand substitution, promoting biofuels and other alternate fuels/ renewables, and refinery process improvements for reducing the county's oil dependency on imported crude oil.

Various steps have been taken by the Government to increase the production of domestic crude oil and bring down imports. These inter-alia include Discovered Small Field  Policy,  Reforms  in  Hydrocarbon  Exploration  and  Licensing  Policy  for  enhancing domestic  exploration  and  production  of  Oil  &  Gas  2019,  Natural  Gas  Marketing  Reforms 2020,  Policy  to  promote  and  incentivize  enhanced  recovery  methods  for  Oil  and  Gas, Redevelopment  of  existing  matured  fields  and  development  of  new/marginal  fields,  Revival of  Sick  Wells,  improving  recovery  factors  through  the  implementation  of  Improved  Oil Recovery  (IOR)  and  Enhanced  Oil  Recovery  (EOR)  techniques,  etc.  Government  has  also provided  functional  freedom  to  national  Oil  Companies  and  promoted  wider  private  sector participation by streamlining approval processes through electronic single window mechanism.

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