Swift action by the petroleum ministry has resulted int filling India’s 5.33 million metric tonnes (MMTs), or 39 million barrels, of strategic oil reserves to the brim at an average price of $25 per barrel before international oil prices started heading north, saving about Rs 5,000 crore of public money, two government officials said.
Even domestic refiners could stock 25 MMTs or about 183 million barrels of cheaper crude and petroleum products in their storage tanks at a similar price, the officials said, requesting anonymity.Petroleum and steel minister Dharmendra Pradhan confirmed the development. “We took advantage of global crude oil price crash since the beginning of March this year for filling the unfilled strategic petroleum reserves of 16 million barrels in all the three locations —Visakhapatnam, Mangalore and Padur,” he said.
“Beyond this strategic storage of crude oil, Indian oil marketing companies have procured at March/April prices of crude oil of about 8.5 million tonnes [62 million barrels], which is in the floating storage on vessels,” he said.
State-run oil marketing companies and private refineries cumulatively have about 25 MMT of crude oil as well as refined petroleum products, such as petrol, diesel, kerosene, bitumen, aviation turbine fuel in their regular storages, he said.
“These quantities have also been procured during the low crude price period. As a result, about 20% of India’s annual crude oil demand has been procured at cheaper crude prices,” the minister added. India, which is the world’s third largest energy consumer after the US and China, imports more than 80% of the crude oil it processes.
According to the oil ministry’s data-keeper, Petroleum Planning and Analysis Cell (PPAC), India had imported 227 MMT crude oil in 2019-20 worth $101.4 billion. Anupam Manur, assistant professor at the Takshashila Institution said, “Filling up the existing storage capacity in our refineries and underground caverns was a low-hanging fruit and fortunately, the government promptly acted upon it. However, we missed the trick by not being ready with the Phase-II of our SPR plans, which could have added 12 days of storage capacity.”
“Even now, we could gain by looking at other opportunities for storage – building over ground tankers within India and leasing storage space in other countries such as Sri Lanka, Oman, or UAE. In any case, we should seriously consider building extra capacity to be ready when the next opportunity presents itself,” he added.