India to import 9 mn barrel of oil for its strategic reserve
2 min read 19 May 2023, 12:55 AM ISTIndia allocated ₹5,000 cr in its budget earlier this year toward filling stockpiles
PremiumIndia is considering refilling its strategic hoard of crude oil, joining the US as the world’s top guzzler begins to rebuild its depleted stockpiles after a period of drawdown.
India plans to import about 1.25 million tonnes (9.2 million barrels) of oil to fill empty reserves, said people with knowledge of the matter, who asked not to be identified as the information isn’t public.
The grades and timing are still under discussion, one of the people said. It’s unclear if India, which has emerged as a major buyer of Russian crude since the Ukraine invasion, will choose to buy cargoes from the OPEC+ producer, or its traditional suppliers in West Asia.
The US and India are making plans to beef up reserves—the back-up for emergencies such as acute global outages or price spikes—as benchmark prices trade near the lowest in more than a year. Brent is around 45% lower from its 2022 high as demand concerns hang over the market.
An oil ministry spokesman didn’t immediately reply to phone call and text message seeking comments.
India plans to fill about one-quarter of its reserve spread across two sites in Visakhapatnam and Mangalore. India has strategic storage in three locations with capacity to hold about 5.33 million tonnes. The capacity is not much considering India imported 232.4 million tonnes crude in the year ended 31 March.
India allocated ₹5,000 crore in its budget earlier this year toward filling strategic stockpiles.
The International Energy Agency said in February that the funds could cover purchases of about 10 million barrels of Russian crude, or around 7 million barrels of non-sanctioned oil.
The country last added to its strategic stockpiles in 2020 after oil crashed due to Covid lockdowns, buying crude at an average price of $19 a barrel.
The South Asian nation initiated a plan early last year to allow local and foreign companies to lease space that could accommodate around 8 million barrels at two underground locations.
However, India’s refiners were unwilling to pay what the government was asking to rent the space, one of the people said.
Discussions about leasing storage were also held with Saudi Aramco and Abu Dhabi National Oil Co. (Adnoc), but they didn’t progress, according to Parliament documents.
Adnoc signed a deal in 2017 to lease some space, enough for almost 6 million barrels.
India is seeking to increase its reserve capacity by 6.5 million tonnes, but progress has been slow due to issues related with land acquisition.