In an interview with CNBC-TV18, Hardeep Singh Puri, Minister of Petroleum & Natural Gas, said, “Energy consumption is now way past pre-COVID levels, this is true for India, and I suspect this is also true for countries elsewhere because economic activity has revived. In the case of India, our petrol consumption is almost 15 to 20 percent beyond pre-COVID levels. In the case of diesel also, it is about 8-10 percent more than pre-COVID levels. Now please remember, 20 percent of our import bill overall is on account of energy imports. Our gas bill has shot up by 7.2 percent or so. For a country like India, which is dependent 85 percent on hydrocarbons, liquid hydrocarbons for imports, and about 55 percent on gas, obviously, what happens in the world market is of major concern to us.”

He further mentioned, “Now the normal conventional argument given at this point is that there has been underinvestment in the exploration and production sector. Also, since everybody is moving towards green energy, maybe that is why there is underinvestment and maybe that is why there is a higher cost. Whatever the reason, if prices of energy go on reaching and passing these unprecedented levels, they will impact and ultimately undermine economic recovery. And that would be a global phenomenon.”

“The point that many of us are making now and this is an issue of interest to all- consuming countries, not just a developing consuming country, it is also affecting those consuming countries in the industrialised West. But more than that, the transition from fossil fuels or traditional fuels to green fuels has to be orderly. It has to be predictable and it has to avoid aberrations and slight or big shocks. I think that's a point understood,” Puri mentioned.

Throwing light on conversations with his counterparts in Saudi Arabia, UAE, Russia, and others, he said, “I am reassured that at least the concerns are being heard. Whether they will be factored into decision making remains to be seen, because yesterday I heard many of the ministers participating say, they are conscious of this and that they will produce more, but it is not only a question of producing more, you also have to release the additional capacity into the market. So, if that happens, you will see slight relief. But at the end of the day, we cannot have a situation where the demand curve is higher than the supply curve because that is a recipe for exorbitant prices.”

The rising oil prices should have impacted the demand but it has not and even at these all-time highs in the Indian markets, the demand still seems to be coming back.

Puri said, “There is a reason for that, because when you compare year-on-year figures, I suspect we are comparing the post-lockdown period figures when the price of crude went down to $19.56 a barrel. And if you compare it to today, which is a year and six months down the road from March 2020, it is at $84 per barrel. So, one of the lessons I learned as a student of such situation is that comparisons have to be between like situations or as they say in trade, negotiating terms between similar products.”

“Ideally, when the demand is picking up, that is a sign of heightened economic activity after an extended slowdown period. And I don't think people should be complacent because if prices go up and continue to remain at these levels, it will not only affect demand, but other things will happen as well. You will see the direct and indirect impact of high prices on several other sectors,” he added.

He further said that the government is expanding the exploration and production sector. “In the northeast, we are expanding from 30,000 square kilometres to 60,000 square kilometres. Our sedimentary basins out of 26, only 8 are under exploitation so, we are taking very strong and bold action under the leadership of the Prime Minister. However, our partners, whether they are in the other consuming countries or in the producing countries, will also hopefully take note of the fact that for all of us to have a win-win situation, some of us have to take those extra actions etc.”

“We are increasing the storage, size of our strategic reserve. I hope we don't reach a situation where high prices result in falling of demand and then economic recovery, not only here but elsewhere will be undermined,” Puri stated.

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On fuel excise cuts, Puri said, “All I can tell you is decisions on what the extent of excise should be etc., are collectively taken by the government and I am sure they're receiving attention in the Finance Ministry. But please look at this in totality, the Rs 32 a litre that the government collects by way of excise is what makes it possible for the government to provide rations for three meals in a day to over 90 crore people. I am not in a position to either anticipate what will happen or how it will happen. And even if I knew, I would not be negotiating or making the announcement.'

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"My own view is that there is action required at the international front to appeal to our partners, who are in the producing countries, try and use our marginal persuasion and take domestic action to increase and look at what other actions we can take in order to provide relief to the customer,” he said.

Puri further mentioned, “Relief has to not be in a short-sighted manner because if you take short-sighted measures then that is not a solution. So we have to find a solution that is viable, and certainly, the interest of the consumer is paramount in the minds of those who have to make the decisions.”

Watch the accompanying video for the full interview

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(Edited by : Dipikka Ghosh)