India’s ONGC plans to build up a strategic national reserve of crude totalling 1.75 million tons, or 12.8 million barrels. The company would also ask the government to allow the commercial use of the stockpile, Reuters reported.
India currently has a national crude oil reserve of 5.33 million tons, which is equal to about 39 million barrels, in three locations in the southern part of the country. The sites are managed by a government-owned entity, Indian Strategic Petroleum Reserves Ltd. The maximum reserve capacity can cover only eight days of national oil demand.
India’s government 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, last month. The decision followed an energy supply crunch, which led to fuel price hikes and surging inflation in the world’s third-largest oil importer.
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.
In addition to the facility to be built by ONGC, New Delhi has plans for two more—one with a capacity of 4 million tons, equal to 29 million barrels, and another with a capacity of 2.5 million tons, or about 18.3 million barrels.
India is also considering hosting foreign oil inventory. During a recent visit of Prime Minister Modi to the UAE, the latter’s national oil and gas company said it plans to increase the amount of crude it stores in India to 30 million barrels. On the other hand, ADNOC could boost the amount of Indian crude stored in the UAE, specifically at the port of Fujairah, which sits outside the Strait of Hormuz.
By Irina Slav for Oilprice.com
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