India to increase energy security by adding new strategic reserves of oil
The head of the company responsible for strategic reserves, who spoke on Wednesday, said that India is looking at building three new strategic oil reserve to increase its emergency stockpile as well as strengthen energy security.
India is the third largest oil consumer and importer in the world. It imports over 80% of the oil it consumes and constantly diversifies its crude sources so as to minimize the impact of geopolitical crisis on its oil procurement.
L R Jain, CEO of Indian Strategic Petroleum Reserve Ltd, said that the state-run engineering firm Engineers India Ltd was conducting feasibility studies for building new reserves. L R Jain, CEO of Indian Strategic Petroleum Reserve Ltd said that the state-run engineering consultancy Engineers India Ltd is conducting feasibility studies to build new reserves.
India has strategically located petroleum reserves in three southern Indian locations: Mangalore (in the north), Padur (in the south) and Vizag. These reserves can store up to 5,33 million tons. They could be used in case of a disruption in supply.
He said that the company plans to build a new salt reserve of 5.2-5.3 million tons in Bikaner, in the desert state Rajasthan, as well as a facility of 1.75 million tons in Mangalore, in southern Karnataka.
He said that a reserve will be created in Bina (central Madhya Pradesh), with a capacity to be determined.
The federal cabinet will need to approve the project after feasibility studies.
These facilities will be added to the new 2,5 million-ton strategic oil reserve in Padur, and the 4 million-ton facility in Chandikhol (east Odisha) that were already approved.
India has, over the years, changed its policy regarding strategic petroleum reserves in order to allow for private participation and commercialisation. This is similar to the model used by Japan and South Korea, which allows private lessees to trade crude oil.
Jain stated, "We need 90 days' worth of reserves." Jain said, "Indian fuel demand is also increasing so we need to increase our storage."
India could also join the International Energy Agency by increasing its oil storage capacity. The agency requires that members have 90 days' worth of oil.
India's fuel storage capacity is sufficient to cover its demand for 75 consecutive days. This includes the capacity held by companies as well as in transit. (Reporting and editing by Jan Harvey; Nidhi verma)
(source: Reuters)
