May 08, 2020 09:07 AM

Dr. Ajay Kumar chairman of Fox Petroleum Group of Companies . His main business region is in Gulf Countries but apart from this, Fox Petroleum already spread its wings worldwide more than 15 countries . So he is the right man to ask the government of India policy and politics of the government India amid COVID-19 Oil market crash, He speaks to our international journalist Dr . Manju Dagar . He has described how COVID 19 Virus may Impact on oil market crash .

 ? What is happening in the oil and has market ? Do oil market need Government Intervention for a support ? 

-Dr. Ajay kumar : The COVID-19 pandemic has brought unexpected challenges to the global oil and gas markets, with demand destruction, a supply surplus, price shocks, disruptions in the industry supply chain as well as delaying industry gatherings and forums that deliver thought leadership and commercial solutions. We need to find and explain to the Government - What do sub-zero crude oil prices mean for the Market ? It’s not free, ZERO is still a price. 

You can see Dr.Manju the leading Questions to the thought leaders is who will counter this crisis and how ? The answer came from The Government of India Policy makers, and I quote - “No measures are required because these are exogenous factors on which sometimes markets react,” Economic Affairs Secretary Atanu Chakraborty told Bloomberg News in New Delhi on Monday. “The country’s internal economy is absolutely stable.” I doubt this man has any qualifications and know how about the oil market or just he mocked – Oil & Gas Industry Gentleman like me. Or May be his understanding is – Top two Oil Industrialist in India are okay that means – Oil Market is Okay. 

? But Ajay ji If the Government of India is saying – “no need to be panic then no need to be panic”?

-Dr. Ajay: Yes, I am not in panic. Panic gripped financial markets on last Monday as the world braced for a full-blown price war in oil. India’s S&P BSE Sensex stock index slumped more than 4%, sovereign bonds rose to their highest since 2009 and the rupee weakened. Panic gripped in international market too. I think, being a super idiot I can see, that Government can’t see being so super intelligent. India’s financial system is facing its own problems following the rescue last week of the nation’s fourth-largest private lender.

 ? But, Oil market crisis is due to COVID19 Pandemic which halted operations and supply or do you think – there is some other reason behind it. How it impacts Indian Politics, my question is not about Policy makers? 

-Dr. Ajay: Yes, too extent temporary period, the crisis is due to pandemic, which halted supply chain as I stated earlier, and no surplus storage system in place for such long produce. Hence, Policy makers need to make arrangements so that supply side remains functional. Otherwise, some of the Cash Counters of Economy will see permanent closer. This is precisely why the US last week brought Russia and OPEC to the table to agree on production cuts, which will only take full effect beyond June. This will likely allow US shale oil to survive in a diminished form, again. Worse, while some of the corporate entities may perish, the oil reserves remain. You know what I mean, still oil will remain the main focus and oil man will die. 

The COVID-19 pandemic has brought unexpected challenges to the global oil and gas markets, with demand destruction, a supply surplus, price shocks, disruptions in the industry supply chain as well as delaying industry gatherings and forums that deliver thought leadership and commercial solutions. We need to find and explain to the Government - What do sub-zero crude oil prices mean for the Market ? It’s not free, ZERO is still a price.  

See, India has not a big role to play, as India is buyer, not a supplier of Crude Oil. But, India has no such infrastructure to reserve oil during this pandemic time with cheapest oil price. And, I know, Saudi Arabia aggressively pursued market share again, offering steep price discounts to its buyers, coupled with its old standby of production increases. Russia responded in kind; the supply glut combined with depressed global demand has resulted in unheard-of prices. The Politics of Government of India is forbidding to do so, as India is more inclined on US version of politics in real. And surrounding geo-politics is not in favour of India despite “so called free oil as I have learned from News Sources in India” and not having any such strategic storage units for bigger purchase. 

? Whatever it is – sinking oil prices is going to help Indian Economy and India People with cheap fueling in their tank? What is your take on this? 

-Ajay Kumar : When oil futures markets are in extreme contango, it helps the importing Country, India is one. But it depends on the Policy makers mood as they were not scientific in their approach in dealing low oil price and take benefit out of it. Moreover, we don’t have enough infrastructure as well in place till date. No government has cared about it. Let me quote your facebook post – all the Governments in India be it State or Union Government increased taxes on OIL. It shows, pandemic effect. It also states Government needs money. So Oil is the only source in India which makes economy sustainable. For your kind information dr.Manju, India is a biggest exporter of refined petroleum products which balances foreign reserves. But this lock-down has decreased that also in Government collections. It means, sinking oil prices has not helped Indian people, its because of The Government of India Policy makers, they know the best reason. 

?If sinking oil prices is not good for importing country like India, is it good for America? 

Ans by Ajay Kumar: Sinking Oil prices can never be good for America. We have seen more or less the Policy makers – copy pasting policies. We have seen in America too, the fact that the federal government and Texas are seriously considering colluding to raise prices above competitive levels pretty shocking. That is bad for the US economy. Like what we see here, more tax burden on OIL from State and Union Government, but here it will kill people, not economy. Don’t worry, US, Russia and OPEC has curtailed the production, which is good for world economy, if US Companies and World will not be earning in Dollars, then who will be investing in India. There rise is also makes us grow. 

Today's low oil price can be seen as just a blip in the long term trend, which is for energy demand to grow at 16 per cent a decade, CO2 in air to grow at 5 per cent a decade, and mature fields to deplete at 4 per cent a year. The fundamentals show oil prices coming back to $100 a barrel in two years. Tell, your Governments whom you know, very bumpy ride is ahead. 

The tight oil business can be blamed for the low oil prices of the past 5 years, but that probably should not have happened, considering it has now left companies with nearly $1tn of debt, he says. 

With oil prices at $85 a barrel, a reduction in new project risk from 40 per cent failure to 30 per cent, and tight oil out of the picture, E&P companies will be able to afford to do carbon capture and storage alongside new projects. 

Considering that the long term trend for clean energy is to grow by 2 per cent of energy demand a decade, we will not be able to reduce CO2 emissions any other way. So, relax. Oil will jump one more time. 

?Finally, Dr.Ajay one last question – and straight answer expected from you for layman’s like us who has no interaction or knowledge of Oil and Gas and their people. The Question is – Who is responsible - The Government of India Policy or The Politics of the Government India amid COVID-19 – Indian Oil Market Crash? 

He smiled and said Manju ji So, you want to have my next interview from TIHAR JAIL ( I smiled too ). Dr.Ajay said see the Policy makers are wrong, The Politicians gets narrow escape from this charge. Policy makers should have guided the Government, here in India, the Prime Minister is guiding the policy makers, it may lead to mistakes, as I don’t see Prime Minister has past experience of serving an oil Company. If, Yes, If YES he, then he must have been working besides as Chief Minister as an oil man in Gujarat. It’s essentially bailing out mostly shareholders of oil companies of Gujarat, I’m sorry for everybody who’s losing money, but they shouldn’t be at the front of the line when we start thinking about who needs help through this crisis. The People of India or the Oil Companies despite almost bottomed out oil price. Government trying to cover the debts of Oil Companies by increasing burden on Citizens of India. This is leading towards crony capitalism. This is cheating with Indian people. They should not be made escape goat for Oil Companies bad debts and those debts are due to their bad managements and under table scams and you know very well ,this is Politics. Thank You, Please 

At the end I convey my thankyou to Fox Petroleum chairman Dr . Ajay Kumar who share his valuable time with us on this very important global phenomena.        (Dr . Manju Dagar International Journalist, India)

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