India Unveils Strategic Oil Stockpile Plans

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India Unveils Strategic Oil Stockpile Plans - WSJ.com

NEW DELHI -- India is planning to create an emergency oil stockpile more than twice the size of previously announced reserves, and could use it to cushion the country against both supply disruptions and price fluctuations, a senior oil ministry official said Wednesday.

India is now planning to build strategic petroleum reserves of nearly 18 million tons, or 132 million barrels by 2020, expanding on a 5.33 million ton stockpile whose storage tanks are now under construction, Oil Secretary G.C. Chaturvedi told reporters.

This may cause problems with the U.S. and the International Energy Agency, who have a longstanding policy that strategic oil reserves should only be drawn on in times of physical shortage, and not be used as a hedge against price moves.

"These [strategic crude reserves] are mainly for contingency plans. It can be used in case of price fluctuations also," Mr. Chaturvedi said.

Mr. Chaturvedi said India will need 180 billion rupees ($3.41 billion) to fill the current crude reserves that are under construction. India relies on imports for 75% of its crude needs.

He didn't forecast how much the extra oil would cost but as this would be "substantial", the government may let overseas oil companies utilize the reserve.

Several overseas companies are interested in this and "we are looking at various models. We have not zeroed in on any model as yet," he said.

"They can use our storage and take oil out for selling when they want. But in case of need, we can force them to necessarily supply that crude to us," he said.

IEA member South Korea allows some foreign oil companies to use its SPR tanks as trading depots, but in turn they have an obligation to ensure supplies if the government needs to draw on the SPR.

India's decision to expand its SPR comes just as China is increasing its buying of crude for its reserves.

China has already completed and filled 103 million barrels of storage in the first phase of its SPR plan. It is now working on a second phase of 169 million barrels of storage by 2013 and by 2016 will build a final phase of 228 million barrels of storage.

India's state-run Strategic Petroleum Reserves Ltd. is building storage tanks in the southern cities of Visakhapatnam, Mangalore and Padur.

Last week, Oil Minister Jaipal Reddy said that the government is considering establishing new storage facilities in the southern state of Karnataka, in western Gujarat state, in eastern Orissa state and in Rajasthan in the northwest.

Mr. Chaturvedi said five million tons of the additional 12.5 million tons of SPR crude could be held in rock caverns in Padur and that the government is also looking at Rajasthan's salt caverns as a possible depot.
 

Ray

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Strategic reserves in all commodities is very essential to ensure no economic shocks, caused by a fluctuating market and resources.

Oil is what powers a nation both economically and militarily.
 
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Tshering22

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Well we must start looking the Saudis for oil. While they have a lot of it, there are other sources that can be used from both within middle east and outside. Iran is a good option, Israel (Natural gas) is another upcoming option. Qatar and Oman are liberal countries politically compared to Saudi and make good partners. Africa is a very viable candidate if our government invests massively into African oil-rich nations. From many reports I have read, Africans are comfortable with us around instead of Europeans.

Russia of course is a very valuable oil source, but because of a strategic blunder of elephantine proportions, we have the entire CAR regions energy hostage to a failed state's threats. Vietnam has significant reserves and with their own open invitation, we should double up on it.
 

JBH22

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what are the measures to protect these storage facilities? i mean good anti-aircraft coverage and so on...
 

agentperry

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strategic oil depot are those stores who are used in peace time to save internal economy from the burnt of price fluctuation and international spat like iran threatening oil cap or new row in eurasia where russia stopping gas or petroleum supply to europe thus triggering panic and price rise. this will SPR acts as antibodies then.
moreover during war, these SPR acts as pumps for military because this is the time when countries shows whom they are with, blockade happens and refineries come under attack.

they should be filled up with cheap and economical fuel either domestic or imported.

of course they will be given due protection as no one will allow 132 million barrels of oil to see the fate of karachi port in 71
 

Yusuf

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Work is at an advanced stage in some place where one of this oil reserve is going to be stored. Will not tell till its out in the open, if at all
 

Ray

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There is no special storage that is done as far as I know.

It is just that the limit is laid and the specified oil storages, which services all, are maintained and not issued.

That the oil depots are maintain those level is periodically checked by the authorised people.
 

Yusuf

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Sir,
Some oil depots have to be secret I guess so that we don't lose them to enemy bombing during a war.
 

sesha_maruthi27

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Were do you think this oil will be taken ? Recently they have found 16 oil wells in the KG-BASIN (from were I hail).
 

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