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  • China’s Strategic Petroleum Reserves: A Reality Check

    While maintaining a reserve of 100 days worth of imported petroleum consumption at present consumption rates may be the stated policy of the Chinese government, an analysis of the existing capacities seems to suggest that China may be in a position to store much larger strategic oil reserves should it so desire.

    May 21, 2012

    Going Beyond the Public Statement on Iranian Oil

    Having rejected the western demand for oil sanctions, the real test for the Indian government lies in whether it can implement its public pronouncement.

    February 09, 2012

    EU Oil embargo on Iran—China is now the pivot

    All China has to do is to purchase Iranian oil and off-set this against a supply of essential consumer goods from China to Iran and settle the accounts in Chinese Yuan.

    January 30, 2012

    The Persian Gulf Cul-de-Sac

    With growing tensions between the US and Iran leading to a drawing of maritime red lines, the Iranian threat to close the straits of Hormuz and the US response could affect future maritime issues, oil supplies and the world economy.

    January 12, 2012

    Harsha AH asked: Even though Iran was willing to accept the payment for India’s oil imports in the Indian currency, why did India declined from doing so?

    Shebonti Ray Dadwal replies: According to reports, Iran is willing to accept payments in rupee for the crude it sells to India but the Reserve Bank of India (RBI) is opposing the idea. Iran's central bank had expressed their vote of confidence in the rupee during their meeting with RBI executives, where they said that they were ready to operate through a State Bank of India (SBI) branch in Mumbai where state oil firms can make rupee payments. But RBI is against this arrangement on the ground of high trade imbalance between the two countries. Iran imports goods from India worth only $1 billion against the huge amount New Delhi pays for its oil. Also, many Indian banks do business with the US and are wary of coming under the US sanctions.

    However, recently it appears that some smaller Indian national banks are being used to make payments to Iran, such as the UCO, Union Bank, etc. In mid-January 2012, a finance ministry team from India will be in Tehran for talks to resolve the payment issue, where some innovative ideas on how barter trade can be conducted on the lines of China-Iran and Iran-South Korea trade may be discussed.

    Mapping Chinese Oil and Gas Pipelines and Sea Routes

    China is pursuing an energy policy to alleviate its import dependence, diversify the sources and routes of imported oil and prepare for supply disruption. China's import of hydrocarbons is growing rapidly. Besides sea transport from West Asia and other oil rich countries of both crude and liquefied natural gas, China has also identified diverse import routes for oil and gas by overland pipelines. Some projects are now complete and many are under construction or in the planning stage.

    July 2011

    Vikas Kalyani asked: With oil crisis arising, what should India do to reverse the energy crisis & become self sustained in energy requirements & fulfillment?

    Shebonti Ray Dadwal replies: Apart from the fact that an oil "crisis" is unlikely, the fact remains that prices, and not supply will become the main issue of concern. If we are talking about the oil market per se, India can do little in terms of increasing supply given its limited reserves and growing demand, and it will have to keep importing the same. Apart from diversifying oil import sources from the Middle East region and looking at tying up long term deals with other countries (Africa, Latin America, Russia) to take advantage of preferential pricing in the short term, as well as investing in foreign oil blocks/equity, India should do the following for the medium to long term:

    1. Reduce demand by initiating better demand management.

    2. Implement recommendations on subsidies on oil pricing to reflect the real price of oil, which in turn can reduce demand.

    3. Introduce strict norms for auto industry (which is the largest consumer of oil), in terms of energy efficient technology.

    4. Improve and encourage mass transport as against private vehicles.

    5. Invest more in R&D to hasten the transition to third generation cellulosic biofuels.

    Protests in the Arab World: Implications for the Region and India

    The ongoing protests against undemocratic regimes in West Asia and North Africa have sent shockwaves throughout the region. This Brief analyses the protests in the Arab world and their implications for the region and India.

    March 31, 2011

    Challenges for Saudi Arabia amidst Protests in the Gulf

    Saudi Arabia’s concerns about regional stability and its domestic vulnerabilities have risen to the fore amidst popular protests in the Gulf region.

    March 25, 2011

    West Asia and Oil Politics

    Today hardly any part of the world is untouched by the interplay of oil and international politics. Consumers as well as producers are concerned about the impact of national and international events that increase or restrict the supply of energy. Given that the West Asian region holds the world's largest residual oil and gas resources, the article seeks to analyse the importance of West Asia in the context of the changing geopolitical situation and its impact on the current oil market. The article also focuses on the issue of the petrodollar and looks at its impact on the oil market.

    March 2011