Iraq rules out special pricing of crude oil for India

Mumbai: Iraq, the second-largest supplier of oil to India, has ruled out offering any special price to the country because its laws don't allow it to do so.

"Our laws do not allow us to offer any special pricing to anyone. We can sell crude only at the existing market- determined prices," Iraqi Deputy Prime Minister for Energy Hussain Ibrahim Saleh al-Shahristani said here last night.

India imports about 20 million tonnes of crude oil from Iraq annually and the government is keen to increase this to meet demand from new refineries. Iraq is the second-largest oil supplier to the country, after Saudi Arabia.

Shahristani was responding to a query on whether his country could offer discounts to India -- considering the old ties between the two countries -- as Iraq seeks to increase crude supplies to the country and woos investments in the oil and petrochem sectors.

He was delivering the Oberoi Lecture series organised by the Oberoi hotel group and the International Institute for Strategic Studies on recent trends in the global energy, oil and gas economy here last night.

Noting that India's oil demand will rise 4-5 percent annually, Shahristani offered uninterrupted oil supplies and also sought increased investments into his country, which needs USD 500 billion to improve infrastructure after the war-time destruction.

"India can count on Iraq as a dependable, long-term supplier of its crude oil needs," he said.

"Your oil imports are expected to reach 6.8 million barrels per day by 2035 from around 2.5 mpbd now. Where should India look for its oil needs? Iraq will be the main source of growth for the global oil supply over the next decade or two," he said.

"India's dependence on oil imports will rise from 74 percent in 2012 to a whopping 92 percent over the next two decades, which requires special attention to be given to the issue of security of supply."

Shahristani also said Iraq is keen on joint investments in the oil sector in the country and had already evinced interest in the near-complete 15 million tonne oil refinery being set up by Indian Oil at Paradip.

Reliance Industries Chairman Mukesh Ambani, who was present at the lecture, told reporters that RIL is exploring investment opportunities in Iraq.

"We are evaluating all opportunities in Iraqi oil and gas sector. But so far, nothing has been finalised and we will take a call on this -- both the downstream and upstream assets -- in Iraq by the end of the year," Ambani said.

He was categorical in saying that his company has no plans to enter the mid-stream sector in Iraq.

Shahristani also called upon Indian investors, including Reliance Industries, to invest in the construction of export outlets, pipelines connecting oilfields with export terminals as well as tank farms to increase storage capacity.

Besides, Indian companies can also participate in the construction of power projects in Iraq, he said. He wanted the Indian government and companies to increase the pace of bidding in Iraq's oil and gas sector, like China.

He said his country is open to joint ventures by Indian and Iraqi companies in the oil and gas sector as the Gulf country seeks to become a petrochemical hub.

Iraq, with proven reserves of 143 billion barrels, or about 11 percent of the world's total, has three main refineries -- Baiji, Daura and Basra -- with a total capacity of around 5,67,000 barrels per day. It wants to increase the capacity to 7,50,000 bpd.

He said Iraq is also planning to set up four refineries in Karbala, Kirkuk, Missan and in Nassiriya.

After years of war and sanctions, Iraq aims to produce 5-6 million bpd of crude by 2015 against the current output of 3.4 mbpd, the highest in three decades.

Last month, Oil Minister Veerappa Moily had said Iraq has already offered three discovered oil blocks to India in the Middle Furat oilfields - Kifil, West Kifil and Merjan oil blocks.

PTI