Here is a verbatim transcript of the exclusive interview with RS Sharma on CNBC-TV18. Also watch the accompanying video.

Q: Talking about couple of other factors that determine pricing for crude oil. The first one is extraction - in that is there any determinant to what happens with pricing and how difficult or how easy it is to extract oil?

A: The basic fundamentals of the demand and supply, under that it comes that when the supply sources are limited then in that case, what are the marginal production coming and what’s the cost of producing that marginal oil, that determines the price and we know that especially the North Sea, Gulf of Mexico, all the entire Organization of Economic Co-operation and Development (OECD) countries, they are alarmingly seeing their production declines happening and if the production increase is either coming from Organization of the Petroleum Exporting Countries (OPEC) countries or Former Soviet Union (FSU), more and more of this production is coming from the frontier areas, deep waters where the cost of production is high and if we look at this oil cents, they are coming in a big way to contribute for oil production in times to come. We find that the cost of production from these marginal areas is quite high even this improved oil recovery (IOR) that has increased production from the existing fields, the cost of technology, the cost of oil field services. So we feel that now the cost itself doesn’t make it viable to produce at a price less than USD 60-70. One thing is obvious that in time to come, the easy oil prices or what we had seen until the 90s, those price levels are a thing of the past. We find after 2002 onwards, prices have been constantly going up. Last year there were serious concerns whether the future, demand for oil, whether the supply sources will be able to make and that got exploited by the derivatives market. Lot of these producers, the countries, through their own entities they came to the derivatives market and we find that the actual trades for 50 times than the basic purchases and trade is happening on the actual basis. So that market got excessively heated where everybody felt comforted, traders, producers that prices keep going up. And the bubble had to burst when the financial markets collapsed, everybody started to look for someday somewhere to roll back their positions and all of us started to find the collapse happening on the crude prices. But again the fundamentals are coming into play and the prices have again started moving up. I feel whatever the current prices are there, we don’t hope to see the price levels going down less than these levels.

Q: You mentioned that there was some amount of speculation as well in the crude market; the derivatives market perhaps put it up higher, put prices up higher. Do you see a situation over the next few months where crude prices go back to USD 150 per bbl. Does that look fundamentally viable as well because this scale back has been very sharp this year for crude prices?

A: There are the database to support these speculative trades and are as high as 50 times than the actual trades, so basically the prices get determined by the speculative trade than the actual purchases and sales happening. So that is a position on to what extent this speculative market is going to determine and I feel since the long term supply sources, there are the concerns about the capacity built up and I think that this trend of this speculative market  is dominating and is going to stay and there is going to be a lot of heat on the pricing and how and when the prices will again reach to three digit level is difficult  to say but I am very positive in foreseeable future we will again see the prices going to the three-digit level.

Q: You mentioned USD 50-60 per barrel as a range. But many fundamental analysts are already talking about USD 75-77 per barrel or more than that?

Sharma: Current price levels are about USD 70-72 per barrel already. So USD 50-60 per barrel is again a history. In near-term I don’t think the prices are going to go down to again USD 50-60 per barrel; they are only moving up. Sometimes, for a day or so, they come down but they again go up. Prices have already touched USD 75 per barrel and I feel the outlook seems to be more disturbing in the times to come.