Wishing Baghdad could be friendlier to Indian Oil

Vol 6, PW 5 (08 May 02) People & Policy

POPULAR PERCEPTION IS that Iraq and India are old friends from the days of the non-aligned movement.

But the truth is that Indian downstream companies are finding it tough dealing with Baghdad. Take the case of Indian Oil and its purchase of Basrah Light crude.

Iraq's State Oil Marketing Organisation (SOMO) is ignoring IOC's pleas for more Basrah Light. Since December 2000, SOMO wants a 'surcharge' over and above the official crude selling price but IOC doesn't want to pay the surcharge and supplies from Iraq have dried up.

Indian state refiners wanted a total of 1.5m tonnes of Basrah Light during the 9th round of the UN oil for food programme from December 2000 to June 2001. But Iraq refused.

Ditto for the 10th round from July 2001 to December 2001 when India raised its requirement to 1.6m tonnes. Now Indian refiners want to import 3.5m t/y of Basrah Light, at the official selling price, under the 11th round of the oil for food programme, due to begin shortly.

Engineers India is facing similar problems. Last year, EIL tried to get downstream refinery contracts in Iraq.

Yet Iraq never bothered to respond to its proposals. Even private Indian companies are complaining.

J.C Mansukhani, managing director of the private MAN Group, wants oil minister Ram Naik to take action.

"We are facing an acute problem in Iraq where the government is doing special favours to the Russians," writes Mansukhani. "Even if the Indian bidder is the lowest with quality par excellence with international norms his bid is not considered." Later this month Baghdad hosts the 15th session of the Iraq-India Joint Commission for Economic and Technical Cooperation.

India will no doubt complain loudly.