Modi to ask Saudi to abolish Asian premium

Prime Minister Narendra Modi is likely to request Saudi Arabia's crown prince Mohammed bin Salman to nudge the Organization of the Petroleum Exporting Countries (OPEC) to abolish the “Asian Premium”, which the members of the cartel impose on crude oil export to India and rest of Asia.

The Crown Prince of Saudi Arabia is set to visit New Delhi on February 19 and 20 next. He is likely to announce an initial investment by Saudi Arabia into National Infrastructure Investment Fund of India. Modi and Mohammad bin Salman (a.k.a MBS) will also discuss the possibility of enhancing Saudi Arabia's investment in India, particularly in energy, technology and agriculture sectors, sources in New Delhi told the DH.

Prime Minister will call upon Saudi Arabian crown prince to help keep energy prices stabilised for India. He is also likely to raise the pitch for abolishing the “Asian Premium” on energy exports by the OPEC nations to India, China and other nations in Asia.

The OPEC nations imposes an additional “Asian Premium” of $ 2 to $ 3 for every barrel of crude oil they export to India, China and other nations in Asia. The members of the cartel, however, export crude oil to US and other nations in Europe at a cheaper price.

New Delhi has been asking the OPEC members to end the discriminatory pricing mechanism for export of crude oil to India, which imports 80% of its energy requirement.

Saudi Arabia has been the biggest supplier of crude oil to India followed by Iraq and Iran. India has been importing an average of 25 million barrels of crude oil from Saudi Arabia every month.

Prime Minister had his last meeting with Saudi Arabian crown prince on the sideline of the G-20 summit in Buenos Aires in November, when New Delhi was reassured that Saudi Arabia would be ready to help India maintain its energy security in case of any contingency caused by US sanctions on export of crude oil from Iran. MBS promised Modi that Saudi Arabia would continue to meet the increasing demand of crude oil in India, sources in New Delhi said.

The US granted India a waiver, allowing it to continue importing crude oil from Iran, albeit in a lesser quantity. New Delhi officially did not make public the quantum of cut it pledged to make in its crude oil import from Iran in order to secure the waiver from the US. Sources, however, said that New Delhi had conveyed to Washington D.C. that it should be allowed to continue to import 300,000 barrels per day from Iran – a substantial reduction from normal volumes of around 450,000 to 550,000 barrels per day.

A high-level delegation, including ministers, senior officials and Saudi Arabian industry leaders will accompany MBS during his visit to New Delhi.

Saudi Arabia is the 4th largest trading partner of India. The bilateral trade between India and Saudi Arabia was $ 27.48 billion during the last financial year 2017-18. It reached $ 23.24 billion between April 2018 and November 2018.