Dharmendra Pradhan restarts ‘Asian Premium’ debate
With Union Minister of State for Petroleum and Natural Gas Dharmendra Pradhan claiming that Asian counties like India should receive an Asian Dividend, instead of paying an Asian Premium, while making bulk purchase of crude oil, the question on whether there is indeed an ‘Asian Premium’ when it comes to crude oil is back in focus. “I will not hesitate to say that Asian Premium was historically never justified and more so not justifiable in the changed market scenario where Asian countries are the major buyers. Any measure that erodes the advantage of geography for Asian countries and promotes a policy of subsidising oil traffic to distant destinations is not, and cannot be, in the interests of sustainable development. This calls for urgent rectification. I will urge upon the OPEC members to understand this genuine concern,” Pradhan said, while speaking at the 6th OPEC International Seminar in Vienna. 
While never officially acknowledged, it’s often been alleged that Middle Eastern countries charge a premium to Asian nations, taking advantage of the fact that importing crude oil from non-Middle Eastern nations is very expensive for most of them. The question though is if it is a fact or a myth? A detailed The Dollar Business Intelligence Unit analysis reveals that while an Asian Premium might have existed years back, there’s no proof of it existing now. 
For example, in CY2014, while India paid $743.9/MT for its crude oil imports from Saudi Arabia, the US paid $750.3/MT and UK paid $765.5/MT for the same. Does it mean there is a ‘European Premium’? In fact, the US paying over 12.1% more than what India paid for crude oil imports from Venezuela prove that for an actively traded commodity like crude oil, it is ridiculous to imagine that there could be geography-specific premiums or discounts.
June 04, 2015 | 07:06 pm IST.
to success.