Taking advantage of low prices in major oil-producing centres in Saudi Arabia and UAE, India has filled up its strategic crude oil reserves to meet its energy needs in times of emergency and saved a neat $685.11 million in the process.
It bought crude oil at an average price of $19 per barrel to fill its reserves in April and May when prices reached an all-time low while the US oil touched negative price levels in futures market.
The state-funded reserves are meant to tide over short-term supply disruptions and will take care of India’s oil needs for 9.5 days.
The country was already holding half of its total 5.33 million tonnes oil reserves capacity when the government decided to take advantage of the low crude prices.
India’s three petroleum reserve caverns at Visakhapatnam (1.33MT), Mangaluru (1.5MT) and Padur (2.5MT), managed by India Strategic Petroleum Reserves Ltd (ISPRL), are now full.
Another 6.5MT facility is coming up at Padur in Karnataka, and Chandikhole in Jajpur.
Work on two more facility at Bikaner in Rajasthan and Rajkot in Gujarat will be initiated soon. When complete, these facilities will hold enough oil to meet domestic requirements for over a month.
The oil ministry has also told the ISPRL to identify new sites so that the storage facility is increased to ensure oil stock of 90-100 days for use in an emergency at all times.
A large strategic oil reserve capacity can benefit even more from lower oil prices as these lead to huge savings for the exchequer.
The ISPRL has signed a memorandum of understanding with Abu Dhabi National Oil Company (ADNOC) for the lease of half of its 2.5 million tonnes Padur facility. Last year, it signed an MoU with Saudi Aramco for the lease of a quarter of Padur SPR.
The ISPRL has already leased half of the 1.5 million tonne capacity in Mangaluru storage to ADNOC. It has also filled its 1.03 million tonne Vizag facility with Basra oil from another OPEC producer, Iraq.