INDIA: Crudely speaking, it's all about Mani, honey!

It was the proverbial last hurrah. As India, despite its appendage of being the world's largest democracy, finds itself being increasingly left behind in the tumultuous economic battlefield that is Asia today, it was a valiant attempt at taking the lead and making itself relevant once again. Without doubt, petroleum minister Mani Shankar Aiyar's efforts at hosting a first-of-its-kind ministerial conference that has brought together the oil producers of the Middle East and the big four Asian oil consumers -- China, Japan, Korea and India -- deserves kudos.

Aiyar, despite his penchant for the acerbic, can be the epitome of charm itself when he puts his mind to it. And the ministerial conference bore testimony to this. Coupled with the celebrated hospitality of New Delhi's Maurya Sheraton, the visiting dignitaries -- which included the powerful Saudi oil minister Ali I Al-Naimi, Iranian oil minister Bijan Zangeneh,

UAE's minister of energy Mohammed Bin Dhaen Al-Hamli, Qatari minister Abdulla Bin Hamad Al-Attiyah and Malaysian minister Mustapa Mohamed -- were clearly impressed. The top rankers from the buyers' side, however, were conspicuous by their absence. China and Korea were represented by the lower-rung of deputy ministers, while the co-host of the multilateral conference -- Kuwaiti minister Sheikh Ahmed Fahad Al Sabah -- could not make it to New Delhi. This is not to suggest that the meeting today was any less significant; on the contrary. It raised issues which were relevant for both sides -- the buyers as well as the sellers. Aiyar, however, astutely side-stepped the issue of the so-called "Asian Premium" which was ostensibly the raison d'tre of this conference when it was first proposed by him in September.

Kuwait,China, Ali I Al-Naimi,  Japan, Mustapa Mohamed,Abdulla Bin Hamad Al-Attiyah, Bijan Zangeneh, Mohammed Bin Dhaen Al-Hamli, UAE, Saudi Arabia, Sheikh Ahmed Fahad Al Sabah,India, Asia, Asian Bank for Energy Development, Zhang Xiaoqiang,Middle East, Qatar,  Hwwan Eik Cho, China, Mani Shankar Aiyar, As it happens, the "Asian Premium" has now metamorphosed into the great "Asian Discount" since Asian prices are currently pegged lower than those charged by the Middle East for customers in the West. Be that as it may, Aiyar's clarion call for a "just and remunerative oil order" in Asia struck a responsive chord across the board. That's because even though 70% of Middle East oil exports are expected to be sold to Asian consumers in 2005, the Asian crude market continues to remain fragmented. Aiyar's plea for the creation of a strong Asian marker for crude and the forging of a mutual interdependence through cross-investments in each other's countries also found an enthusiastic audience. The meet witnessed a free and frank exchange of ideas: The Qatari minister, for instance, admitted that the Middle East was under increasing pressure to invest money in raising the standard of living of its people, rather than building additional crude output capacities.

Citing the glut of the 1980s when heavy investments had led to excess capacities -- resulting in abysmally low crude prices -- he said this was a major disincentive for investing in spare capacities today. Chinese deputy minister Zhang Xiaoqiang, in turn, pooh-poohed charges that an excessive Chinese demand had led to a rise in crude prices, claiming that China accounted for only 6% of global trade, and the share of imported oil in its consumption mix was less than 40%. Instead, he blamed speculative forces for the surge.

Korean minister Hwwan Eik Cho, on his part, rooted for a joint holding of strategic reserves -- with counties which already had the wherewithal to stockpile such reserves -- as a solution for those countries which will find building such facilities prohibitively expensive. The Iranian minister, on the other hand, called for the formation of an Asian Bank for Energy Development to back up investments in the energy sector --- estimated at a staggering $1580 billion over the next 25 years, in Asia alone. Indeed, the gargantuan dimension of the business is evident from the distinct possibility that China alone may end up importing 8 million barrels per day in the coming two decades.

The centrestage was, predictably, reserved for the Saudis, who -- in keeping with their big-brother status of being the largest producers of oil in the world -- sought to soothe fears of supply dislocations by claiming that they were consistently producing about 9.5 million barrels per day and were capable of raising production significantly should the need arise. Some of the technical presentations made during the course of the meeting warned of serious upheavals unless investments were stepped up to raise output. Others derided the lack of authentic data from Asian countries, the accuracy of which would help in matching supply with demand variations in order to arrest excessive volatility. The archlights may have been on the Saudis but, without doubt, the standing ovation and encore went to Aiyar.

In a carefully calibrated concluding declaration, he -- statesmanlike -- called on the need for larger cooperation amongst Asian buyers and sellers. Pertinently, he was successful in institutionalising the roundtables: the next three conclaves are to be hosted in Saudi Arabia, Japan and Kuwait respectively. Most importantly, Aiyar's triumph lay in firmly catapulting India from the peripheries into the centre of action in Asia as far as the business of oil is concerned, no mean achievement in itself. It was, in many ways, a significant day for India. And, in all fairness, the day ultimately belonged to Maestro Mani Shankar Aiyar. Bravo!

Via: IndianPetro
by Sanatu Sakia