The average cost for India's crude basket in 2008-09 was $83.6 a barrel, against $111.6 a barrel for 2011-12. A related argument is that oil demand will plateau this decade. Lower oil prices will most likely not be the answer to India's crude oil conundrum, and it needs a more comprehensive approach to deal with persistently high prices. Discovered in 2000, it has taken 13 years and $41.2 billion to reach first production.
Shale oil producers in the US need oil prices of $68 to $75 to break even. 28-10-2013 21:46:00
Petroleum, crude oil and oil products form the largest line item in India's import bill, accounting for a third of all imports. One statistic widely reported by the international financial press during the rupee's rout in August-September stated that every one-dollar increase in the average annual cost of India's crude oil basket adds $1 billion to the net import bill.
Substantive - alas, no. Creating pricing mechanisms that reflect market realities for oil, gas and coal will also ensure more interest from investors in India's oil and gas sectors. A case in point is the giant Kashagan field in Kazakhstan.
The argument that oil demand will plateau because of cheaper natural gas is not without merit but overestimates the speed of the switch. No surprise, then, that the rupee's all-time low on August 28 came a day after speculation on US intervention in Syria sent Brent crude to $117 a barrel, its highest level since February 2013.
Sanford C Bernstein, a research firm, estimates that the marginal cost of production of non-Organisation of the Petroleum Exporting Countries (OPEC) oil has increased from under $30 a barrel in 2002 to $104.5 a barrel in 2012. Ishan Bhaskar: LNG - Pipe dreams vs reality. The final piece of the puzzle is backing state-owned companies such as ONGC/OVL to become serious players in the international oil and gas arena.
Similarly, producers of oil from oil sands in Canada need prices of around $80 a barrel to continue producing. Boosting domestic production by incentivising international upstream companies to invest in India is crucial. But surely, what goes up must come down? First, it assumes that natural gas prices will stay considerably lower than crude oil, when an en-masse switch from oil to gas is bound to raise prices. Last Updated at October 28, 2013 22:07 IST Or, why India's overwhelming dependence on imported energy will remain a significant weakness
Cosmetic - yes. See the complete profile on LinkedIn and discover Ishan’s connections and jobs at similar companies.
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That means the world will have to add more than four times Saudi Arabia's current production in seven years! Further, adding gross production of 49mb/d by 2020, or more than half the worldwide oil demand of 90.8 mb/d in 2013, is ambitious, to say the least. That represents two-third of the demand for oil in 2010. "The idea of Kahaaniwaaley has been in the works since the last year-and-a-half. I find the high oil prices scenario more compelling. The bullish view avers that in the near future, oil prices will stay in the $70 to $99 range at the very least. Business Standard is happy to inform you of the launch of "Business Standard Premium Services"As a premium subscriber you get an across device unfettered access to a range of services which include:Welcome to the premium services of Business Standard brought to you courtesy FIS. Ishan has 9 jobs listed on their profile. More Columns by Ishan Bhaskar LNG - Pipe dreams vs reality India's elusive 'shale gale' Reportage of the Indian economy and its fundamentals has become decidedly less shrill over the last couple of months, coinciding with the near 10 per cent appreciation of the rupee since it touched a record low of 68.85 against the dollar in late August. Rising costs of production, therefore, provide a high floor and strong resistance to oil prices settling below the $70 mark. A corollary of the high oil prices of the last few years has been rising costs of extraction and production. New oil production is expensive to bring on stream and can face delays. This view, put forward by Citigroup's energy strategy team, argues that the substitution of oil by considerably cheaper natural gas will compel trucking and merchant marine fleets, railways, petrochemical manufacturers, industrial users, power and heat generators to switch en masse. The Fed taper will resurface again at some point next year with the same ramifications.