Global Oil Majors Looking To Stock Crude Oil In India’s Strategic Petroleum Reserves

Word’s major oil companies are closely examining India’s ambition to create a vast strategic petroleum reserve facility. Humongous Indian facilities can serve as parking spaces for the world majors as they produce oil in large quantities at a time when global oil prices have plunged to levels not seen in more than a decade.

Indian Strategic Petroleum Reserve (ISPR) currently has the capacity to store little over five million metric tons (MMT) of strategic crude oil, just enough to provide 10 days of consumption. ISPR is maintained by the Indian Strategic Petroleum Reserves Limited.

Under the first stage of the Strategic Petroleum Reserve project, underground rock caverns for total storage of 5.33 MMT of crude oil at three locations — Visakhapatnam (1.33 MMT), Mangalore (1.5 MMT) and Padur (2.5 MMT) have already been commissioned. India is planning to develop three strategic crude oil facilities at Bikaner in Rajasthan, Rajkot in Gujarat and Chandikhole in Jajpur district of Odisha as a part of the second phase.

The concept of dedicated strategic reserves was first mooted in 1973, after the first oil crisis. Western strategic reserves have been tapped during the first Gulf War (1991) and after Hurricane Katrina (2005). Besides the energy security, there is a commercial angle to it as well. A major force behind the attraction is the exemption from taxes on income that India provides to a foreign company if it stores and sells oil from the strategic reserves.

Over half the strategic reserves will be filled with Iranian oil. The Indian government is in talks with some gulf nations for the rest. According to sources quoted by Sputnik International, India plans to create more strategic petroleum reserve facilities in the country’s eastern and western parts.