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Rising Oil Prices Could Derail India's Economic Comeback

India’s heavy reliance on imported oil, especially from Iraq, makes it more vulnerable than most countries to the conflict there, with surging oil prices threatening to derail the new prime minister’s plans to resuscitate the economy. Crude-oil prices have shot up to a nine-month high of about $115 per barrel. India imports most of its oil and subsidizes fuel so higher oil prices are particularly painful for Asia’s third-largest economy. They could exacerbate the country’s fiscal and current account deficits as well as its already-high inflation rates. India’s benchmark stock price index has slipped from record highs while the rupee has lost ground against the dollar since June 10. New Prime Minister Narendra Modi has mobilized his ministers to try to contain the fallout from what is evolving into his first economic crisis since taking office less than a […]

Posted On : Published By : Tom Whipple
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Rising Oil Prices Could Derail India’s Economic Comeback

India’s heavy reliance on imported oil, especially from Iraq, makes it more vulnerable than most countries to the conflict there, with surging oil prices threatening to derail the new prime minister’s plans to resuscitate the economy. Crude-oil prices have shot up to a nine-month high of about $115 per barrel. India imports most of its oil and subsidizes fuel so higher oil prices are particularly painful for Asia’s third-largest economy. They could exacerbate the country’s fiscal and current account deficits as well as its already-high inflation rates. India’s benchmark stock price index has slipped from record highs while the rupee has lost ground against the dollar since June 10. New Prime Minister Narendra Modi has mobilized his ministers to try to contain the fallout from what is evolving into his first economic crisis since taking office less than a […]

Posted On : Published By : Tom Whipple
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India Bets on Easing Iran Oil Curbs as Fighting Engulfs Iraq

India spent the past five years cutting its Iranian oil imports to comply with international sanctions. Now, Asia’s second-largest energy user needs the curbs to ease as fighting threatens its supply from Iraq. Tougher U.S. sanctions on Iran meant India was obliged to halve purchases from the Persian Gulf nation since 2009. Indian refiners, which get 85 percent of their crude from overseas, say they expect the restrictions to soften. “We may be exempted from cutting imports from Iran this year,” P.P. Upadhya, managing director of Mangalore Refinery and Petrochemicals Ltd., the second-biggest Indian buyer of Iranian crude, said by phone on June 18. “We expect the U.S. will be softer on Iran as the conflict deepens in Iraq .” Benchmark crude prices are trading at a nine-month high as Islamic militants battle government forces in Iraq, which is now India’s second-biggest oil supplier. That’s boosting costs for importers […]

Posted On : Published By : Tom Whipple
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Indian Shares Fall As Oil Prices Stoke Fiscal Worries

Indian shares fell Friday as the turmoil in Iraq pushed up global crude oil prices, raising worries that India’s import bill could go up and hurt the government’s weak financial position. The Bombay Stock Exchange’s 30-stock S&P BSE Sensex closed down 1.4% at 25228.17 points, while the National Stock Exchange 50-stock Nifty index ended 1.4% lower at 7,542.10 points. India imports about three-quarters of the oil it consumes and Iraq is among its top suppliers. Any increases in global crude oil prices push up the country’s import bill and also increase the subsidies it pays to local fuel retailers. "India is at a risk as all the fiscal control programs will go for a toss if oil prices rise further," said Daljeet Kohli, head of research at IndiaNivesh Securities. Although markets have rallied in recent months, most of the gains have been on the back of […]

Posted On : Published By : Tom Whipple
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Scorching Heat Exposes India's Power Woes

Scorching summer heat caused power outages and triggered protests in India’s capital, underscoring the challenges the country’s new government faces as it strives to improve dilapidated energy infrastructure and restore India’s appeal as an investment destination. Temperatures across northern India have hovered around 115 degrees Fahrenheit, or 46 Celsius, for nearly a week, straining power grids and causing sporadic outages in New Delhi and the adjoining states of Uttar Pradesh, Rajasthan and Haryana. This week, the Delhi state government instructed government offices to turn off air conditioners during peak hours and ordered electricity to shopping malls in the capital to be stopped after 10 p.m. Delhi police said three people were arrested for vandalizing a bus on Tuesday while they protested electricity cuts, and that officers stepped up their […]

Posted On : Published By : Tom Whipple
Category:

Scorching Heat Exposes India’s Power Woes

Scorching summer heat caused power outages and triggered protests in India’s capital, underscoring the challenges the country’s new government faces as it strives to improve dilapidated energy infrastructure and restore India’s appeal as an investment destination. Temperatures across northern India have hovered around 115 degrees Fahrenheit, or 46 Celsius, for nearly a week, straining power grids and causing sporadic outages in New Delhi and the adjoining states of Uttar Pradesh, Rajasthan and Haryana. This week, the Delhi state government instructed government offices to turn off air conditioners during peak hours and ordered electricity to shopping malls in the capital to be stopped after 10 p.m. Delhi police said three people were arrested for vandalizing a bus on Tuesday while they protested electricity cuts, and that officers stepped up their […]

Posted On : Published By : Tom Whipple
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MOL makes big oil find in Pakistan

Hungarian energy company MOL said Tuesday it made an oil discovery in an area in Pakistan close to estimated reserves of 22 million barrels. MOL, though the Ghauri joint venture, said it made an oil discovery at the Ghauri X-1 well in Punjab province in Pakistan . It reached a total test flow rate of 5,500 barrels per day and the Hungarian group said initial estimates of the oil in place could be significant. In the vicinity, the company said , the estimate of reserves in place is 22 million barrels. Oil production from the site could come on stream as early as this month. The Pakistani Ministry of Petroleum and Natural Resources said total oil production from 2012-13 averaged just over 70,000 bpd. The government says it needs to explore, develop and exploit its petroleum resources in order to rely less on foreign supplies to meet its energy […]

Posted On : Published By : Tom Whipple
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Indians riot as heat wave prompts power cuts

Thousands of people enraged by power cuts during an extreme heat wave have been rioting across northern India, setting electricity substations on fire and taking power company officials hostage, officials said Saturday. The impoverished state of Uttar Pradesh has never had enough power for its 200 million people – about the population of Brazil – and many receive only a few hours a day under normal conditions, while 63 percent of homes have no electricity access at all. But recent temperatures that soared to 117 degrees Fahrenheit (47 Celsius) have caused power demand to spike at 11,000 megawatts – far higher than the state’s 8,000 MW capacity – triggering blackouts that shut down fans, city water pumps and air conditioners. Thousands of people stormed an electricity substation Friday near the state capital of Lucknow, ransacking offices and taking several workers hostage for 18 hours until […]

Posted On : Published By : Tom Whipple
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IHS: India needs to reform gas prices

Uncertain reform of natural-gas pricing in India, if allowed to move forward, would revive oil and gas investment and help the government balance its accounts, according to a new study by IHS . Although the government has announced plans to allow gas prices to increase this year to $8.50/MMbtu from $4.20/MMbtu, it didn’t act before national elections held last month. A group led by Reliance Industries Ltd. issued a notice of arbitration when a price increase it expected under an agreement with the government covering the deepwater KG-D6 Block in the Bay of Bengal didn’t take effect on Apr. 1 ( OGJ Online, May 12, 2014 ). By weakening investment in exploration and accelerating consumption, the IHS study says, India’s policies on gas prices have increased the country’s reliance on external supply and helped make it the world’s fifth largest importer of LNG. Citing government documents, the study […]

Posted On : Published By : Tom Whipple
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India Gas Pricing Change Could Boost Investments, Cut Imports

Analysts are counting on Prime Minister Narendra Modi to raise gas prices in India. European Pressphoto Agency India may soon put a floor under years of sliding investment in natural gas production as the new government is likely to increase the price of the fuel offered to gas producers and explorers. The previous Congress Party-led government had proposed increasing the price of natural gas to $8 per million British thermal units from $4.20 per mmBtu, but this was put on hold ahead of the elections . The current level is about a third of the cost of gas imported into India, with imports meeting 35% of local gas needs. Now that voting is over , analysts are anticipating that the new Bharatiya Janata Party-led government will increase gas prices as it had campaigned on the promise of economic reforms and industrial development. Proponents say this is needed […]

Posted On : Published By : Tom Whipple