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Kathmandu,Thursday March 30, 2000 Chaitra 17, 2056.
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Pressure on
domestic oil price recedes
By a Post Reporter
KATHMANDU March 29 - Pressure on
domestic oil prices has receded after the decision by OPEC, the international cartel of 11
oil producing countries, to increase the oil production by 1.7 million barrel per day at
the end of a two-day long annual meeting in Vienna, Austria.
Amid heated debate and
opposition from the small oil-producing members like Iran, Algeria and Libya, OPEC
(Organization of Petroleum Exporting Countries) decided to restore the previous level of
oil production.
With the OPEC decision, the
world will now pump out 76.7 million barrel of oil per day- still three hundred thousand
barrel short of world daily consumption level.
Consequently, the international
price of oil has started to scale back. Based on today’s international price of the
refined oil, the new per metric ton price for diesel and kerosene at Haldia Port (where
international supplier hands-over oil to Nepal Oil Corporation) would be US $ 248.19 and
US $ 242.13 respectively. This price level is significantly lower than the last price
offered by international oil suppliers to NOC.
Vitol Geneva, a Swiss Oil
supplier, which won the competitive bidding, to supply oil during the last bid on March
15, offered US $ 277.25 for per ton of kerosene and US $ 277 for per ton of diesel.
The second top bidder, Glencore
Singapore, offered US $ 292.99 per ton for diesel and US $ 292.28 per ton for kerosene.
Since the International price
has declined significantly and is expected to plunge further as the Northern
Hemisphere’s winter ends (some estimates put the tag at 2.7 million barrel per day),
the threat of domestic price rise seems averted. Yuba Raj Sharma, Managing Director of NOC
also says, "Now there is no chance of petroleum price to rise, at least until the end
of the current fiscal year ending mid-July."
Until last week, the danger of
domestic petroleum price rise looked imminent, for the second time within a period of six
months when India raised the price of petroleum products providing a "natural
excuse" for NOC to raise the price.
International petroleum price
has seen an unexpected swing from bust to bump in the last one year. Crude oil prices sank
to US $ 10 per barrel in early March last year, hitting roughly what it used to cost
before the First Oil Shock of 1973. Contrary to the much-hyped international media threat
of "drowning in cheap oil," crude oil price soared up again hitting as high as
US $ 34 per barrel last week, reaching its highest level since the Gulf War in 1991. Such
a rise in the international price of petroleum invited severe criticism especially from
the United States, the largest oil consumer. OPEC’s current decision is also mainly a
yield to the mounting international pressure.
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