The move will allow the country to quickly increase strategic oil reserves to meet 100 days of oil requirements from current capacity that can meet nine days of oil imports.
New Delhi (Natural Energy News): India has proposed to build a portion of its strategic oil reserve in the US to take advantage of the current low prices and expedite its storage.
This move will allow the country to quickly increase strategic oil reserves to meet 100 days of oil requirements from current capacity that can meet nine days of oil imports.
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India has signed a memorandum of understanding with the US to collaborate on the strategic petroleum reserve during the recently concluded Indo-US Strategic Energy Partnership meeting, which was attended by Indian Oil Minister Dharmendra Pradhan and US Energy Secretary Dan Broil Ate. In addition, both sides have made progress on the storage of Indian crude oil in the US strategic reserve to increase the country's strategic reserves.
This development is significant because India has not been able to create e large strategic storage capacity for crude oil, although a program in this regard started a few years ago. Lack of sufficient space in India's strategic oil reserve has become a case of opportunity being lost to the country, as the current low oil prices created the ideal ground for scaling strategic oil without additional cost.
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"Right now oil depository is only about the need in the market of crude oil. The coronavirus epidemic has reduced consumption and allowed producers and traders to store more oil on water as land-based facilities near tank tops are forced to do. While India will fill its caves. With crude, the lack of space means it has lost an opportunity as well, "the Platts Insight blog previously said.
India's combined strategic oil reserve capacity of 5.33 million mounts is just over half at three locations in the southern Indian - Visakhapatnam, Mangaluru and Padur. Even if it is completely filled, the country will import just nine days of replacement, which is considered too short. In the year 2019, India has imported around 4.5 million b / d of crude oil.
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Asianeighboursrs such as China, Japan and South Korea have much larger strategic petroleum reserve (SPR) capacity than India. China has a total capacity of 550 million barrels, Japan's SPR is 528 million barrels and South Korea has 214 million barrels.
This compares to 39 million barrels for India. For India, this is equivalent to covering just nine days in the event of a disruption, compared to 198 days for Japan at the other end of the spectrum.
However, the government has approved 6.5 million mounts of SPR in the second phase, given the country's dependence on oil under the second phase, capacity will only come in the next six to seven years, giving the country the benefit of current oil prices Lifting will be prevented.
The facility to store oil in the US strategic oil reserve would thus give the country an immediate solution to the lower scale of domestic strategic oil reserves. Although the terms of the construction of this foreign strategic oil reserve are still to be worked out, it is expected to strengthen Indo-US relations to allow it to keep a fast track on the best terms proposed by the US.
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The US has a large strategic oil reserve which is more than 88 million tonnes crude. It also provides its own strategic reserve for third party storage for a fee. But such a facility is offered only to major US allies.
The strategic oil reserve sharing deal will also work to the benefit of the US, which is looking to customers for its shale oil in this overspeed market. India too has increased its oil prices from the US in the last two years and the quantum has almost doubled now.
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India is already the fourth-largest buyer of US oil and the fifth largest for LNG. Bilateral hydrocarbons have increased by 93 percent to $ 9.2 billion in the last two years in 2019-20, accounting for 10 percent of the total trade between the two countries.
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