News Release Details

"Structural shortcomings due to under-investment behind high oil prices…" Sarthak Behuria at the IEF
New Delhi   21-Apr-2008
<img src=/NewImages/Thumbnail/pressreleases.jpg align=left /> "The global oil industry has played an admirable role in ensuring uninterrupted supplies despite facing technological and ecological challenges over the decades," said Mr. Sarthak Behuria, Chairman, IndianOil, while addressing the participants at the International Energy Business Forum held in conjunction with the International Energy Forum (IEF) in Rome. Commenting on high oil prices and volatility in the market, he remarked that structural shortcomings due to under-investment had caused a stretched supply chain. This had resulted in speculative activity accentuating the record high oil prices, he said. The International Energy Forum is being held in Rome from 20th-22nd April 2008 and has attracted Ministerial level participation from over 50 oil producing and consuming nations and the world's top oil companies such as Shell, ENI-Italy, Total as well as major National Oil Companies such as Saudi Aramco, Sonatrach, Pertamina, Sinopec, etc. Speaking on the subject "Reducing Market Uncertainties", Mr. Behuria called for urgent measures such as better supply side management, building up inventories and quickly adopting enhanced oil recovery techniques to augment the supply capacity. He mentioned that oil reserves and refinery additions have lagged behind demand over the past decade. He also said that the halving of OPEC's spare capacity from 4 million barrels per day in year 2000 to about 2 million barrels per day currently is a concern. Touching upon India's role in augmenting capacity along the supply chain, Mr. Behuria spoke about the success story in refining and how India has emerged from a product importing country to a large product exporting hub in the Asia Pacific region. He called for larger investments in global production capacity, increased access to oil reserves and technology, diversification of the energy mix, stable regulatory & fiscal regime and crisscross investments. Addressing the issue of demand uncertainty, Shri Behuria pointed out that as per estimates of various international agencies like World Bank and IEA, the call on OPEC production could double by 2030. The role of bio-fuels and other alternatives will be marginal at about 4% of global supplies. Also, food security is an issue that can restrict the share of bio-fuels. Considering this situation where oil is expected to dominate the energy basket in the short term, he stressed that oil producing countries are in the driver's seat as far as setting the agenda for oil demand mix in the future as any price moderation could make the alternative fuels less attractive. He called for a combination of short term and long term measures to be taken by oil producing and consuming nations to reduce market uncertainties.