India wants foreign investment to help develop its energy sector

Ram Naik's appeal came just ahead of Opec's meeting in Qatar in the Arabian Gulf.

India imports most of its oil from the Middle East but pays more than developed countries despite being geographically close to the source of its supplies, he said.

Mr Naik is on an international tour of potential investors in London and Houston, the hub of the US oil industry, to drum up interest in India's oil and gas sector.

'Two-tier pricing'

He said the price paid by India for oil imports "as compared to (the) USA or European countries is more by $2 a barrel" because of a mark-up known as the Asian premium.

"We feel that the Opec countries should evolve a strategy by which developing countries and developed countries...are not on par," he said.

He added: "Some relief has to be given to the developing countries."

India has been lobbying for changes to the pricing system, but while individual Opec members have shown willingness to scrap it the cartel has so far failed to take a decision, Mr Naik said.

India's energy needs have led it to buy increasing quantities of oil and gas from abroad and the government expects this trend to increase over the next 10 years.

Investment roadshows

However, it was protected against economic damage from steep rises in the price of oil ahead of the Iraq war by its huge foreign exchange reserves.

At more than $70bn, India's reserves are among the biggest held by any country.

The government's attempts to privatise India's oil refineries have proved highly controversial with Hindu nationalists and trade unions, who have opposed them with strike action.

Mr Naik said of his current tour that he hoped to correct some wrong impressions about the oil and gas sector.

The government is offering foreign investors concessions on taxes and royalty payments to help them over the hurdle of their initial outlay, he said.

Improvements in energy distribution should result from the country's East-West gas pipeline, which is to be built by Indian petrochemicals group Reliance, he said.