State-owned Indian Strategic Petroleum Reserves Ltd (ISPRL), which operates India's strategic crude oil storage, will make awards by December to lease around 1 million tons of crude oil storage space (7.3 million barrels) at two of the country's three existing Strategic Petroleum Reserves (SPRs), around a fifth of the total SPR capacity. This will enable the refilling of crude caverns even as escalating hostilities in the Gulf threaten disruptions in crude supplies, two industry sources said.
After dropping a Rs 5,000 crore plan to fill parts of strategic oil storages, the government will lease out space in the underground rock caverns to domestic and international firms to store oil, a top executive said on Tuesday. India Strategic Petroleum Reserve Ltd has built underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store 5.33 million tonnes of oil that can be used in any emergency situation like supply disruption or war. UAE's Abu Dhabi National Oil Company (Adnoc) has already hired half of the 2.5 million tonnes storage capacity at Padur and 1.5 million tonnes facility at Mangalore.
Oil prices have declined by more than 60 per cent since January with benchmark crude falling well below $30 per barrel, driven by an acute oil demand decline caused by the coronavirus and a lack of production cuts by OPEC and other oil producing countries.
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India, which is 79 per cent dependent on imports to meet its crude oil needs, is building underground storage at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka.
India's emergency oil stockpile storage is facing a year's delay because of geological surprises encountered in construction of underground caverns that will be used to cushion the country against supply disruptions and price fluctuations.
India is building its oil reserves in underground rock caverns and tanks
India and the US had on July 17 signed a preliminary agreement for cooperating on emergency crude oil reserves, including the possibility of India storing oil in the US emergency stockpile.
Summary of sports events and persons who made news on Friday
India is the 4th largest oil consumer after the US, China and Japan.
Given that India will get a huge part of its oil supplies from Iran through its government-owned oil PSUs, any unwelcome shocks in global crude rates could be absorbed well enough.
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