America may open its strategic petroleum reserve to store Indian oil

NEW DELHI: India proposes to build a portion of its strategic oil reserve in the US to take advantage of current low prices and quickly scale up its storage.

The move will allow the country to quickly enhance the strategic oil reserve to meet 100 days of oil requirements from present capacity that can just meet nine days of oil imports.

India has signed a memorandum of understanding with the US to cooperate on strategic petroleum reserve during the recently concluded India-US strategic energy partnership meeting attended Indian Oil Minister Dharmendra Pradhan and US Secretary of Energy Dan Brouillette. Also, the two sides have progressed over storing Indian crude oil in the US Strategic reserve to enhance country's strategic stockpile.

The development is significant as India has not been able to build large strategic storage capacities for crude even though a programme on this regard started a few years back. Lack of adequate space at India's strategic oil reserve has become a case of opportunity lost for the country, as current low oil prices created ideal ground to scale up strategic oil without additional cost.

"Oil storage is about the only thing in demand in the crude market right now. The coronavirus pandemic has obliterated consumption and forced producers and traders to store more oil on the water as land-based facilities near tank tops. While India will fill its caverns with crude, the lack of space means it's also an opportunity lost," the Platts Insight blog said earlier.

India's combined strategic oil reserve capacity of 5.33 million Mt at three locations in southern Indian — Vishakhapatnam, Mangaluru and Padur — is just over half full. Even if this is filled up completely, the country will import substitution of just nine days, which is considered too low. India's crude imports averaged around 4.5 million b/d in 2019.

Compared to India, Asian neighbours such as China, Japan and South Korea have much bigger strategic petroleum reserve (SPR) capacity. China's total capacity is 550 million barrels, Japan's SPR is 528 million barrels and South Korea has 214 million barrels. (IANS)

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