India’s government has asked state-owned Oil and Natural Gas Corp (ONGC) to build and fill a new site for strategic petroleum reserves, with an estimated investment of $1.6 billion, local outlet the Economic Times reported on Friday, quoting sources with knowledge of the plans.
The government is looking to boost India’s energy security in the wake of the Iran war and the following oil supply crisis that India felt firsthand, with a soaring energy import bill and rising prices of fuels.
Currently, India’s underground Strategic Petroleum Reserve storage has a total capacity of 5.33 million metric tons of crude oil, equal to only 39 million barrels of crude oil, or eight days’ worth of India’s oil consumption.
The storage sites are located in Vishakhapatnam in the state of Andhra Pradesh, and Mangaluru and Padur in the state of Karnataka.
The new site will be at Mangaluru with a proposed capacity of 1.75 million metric tons. The new underground cavern, on whose construction and filling ONGC may have to spend $1.6 billion, would raise India’s total oil storage capacity by one third, according to Economic Times’ sources.
It was not immediately clear if the new storage site would only hold strategic government reserves or if it could act as a commercial storage site, too.
India has been looking to boost its strategic oil storage capacity for years amid rising demand, with growth rates that have recently exceeded China’s.
The current oil supply crisis during the Middle East conflict appears to have accelerated the plans to add more capacity to hold strategic petroleum reserves.
India’s storage of 39 million barrels of oil, or just about a week of its roughly 5 million barrels per day of consumption, is well below the SPRs of many other large oil consumers, which exposes New Delhi’s vulnerability to sudden supply shocks.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
- 80 Million Barrels of Crude Are Lined Up to Exit the Strait of Hormuz
- Germany Considers Extending Oil Reserve Relief Despite Falling Prices
- ECB: Iran Peace Deal Won’t Erase Europe’s Energy Price Shock
