You might have heard at some point that India is one of the largest importers of oil in the world. This means that we predominantly rely on foreign sources to meet our oil needs. During any international crisis, there’s always a risk of disruption in the oil supply. To mitigate this risk, India has been planning to establish strategic petroleum reserves (SPRs).
Let’s delve into this initiative to understand it comprehensively.
What’s Happening?
According to the Times of India, India is planning to establish its first privately managed Strategic Petroleum Reserve (SPR) by 2029-30. This implies that companies managing oil reserves will have the liberty to trade stored oil. This model has already been successfully implemented in countries like Japan and South Korea.
So far, India has only allowed partial trading for its existing three SPRs (located in South India, with a total capacity of 36.7 million barrels). However, there are plans to establish two new SPRs – one in Padur, Karnataka, with a capacity of 18.3 million barrels, and another in Odisha with a capacity of 29.3 million barrels.
Who Will Manage the Strategic Petroleum Reserve?
According to Jagran, the Indian Strategic Petroleum Reserves Limited (ISPRL) has been established as a special entity to build and operate this reserve. ISPRL will be responsible for preparing strategic petroleum reserves and managing their operations in the country.
Why Does India Need a Strategic Petroleum Reserve?
As per the Economic Times, being the third-largest oil importer and consumer in the world, India is vulnerable to sudden oil shortages or price spikes. Therefore, India is trying to increase its Strategic Petroleum Reserve (SPR) capacity to avoid such scenarios.
This reserve will not only assist during emergencies but also help India qualify for membership in the International Energy Agency (IEA). Membership in the IEA requires having reserves equivalent to at least 90 days of oil consumption in the country.
Currently, India does not have enough reserves to meet this requirement. In February, the IEA stated that even with the existing reserves and SPR, India can only cover 66 days of consumption.
What’s Next?
It may take several years to complete this project. However, this step is a positive initiative towards making India self-reliant in the energy sector. More information regarding this plan is expected to emerge in the coming days.
The target to establish India’s first strategic petroleum reserve is set for 2029-30. It is yet unclear which private companies will be involved in this project and what its structure will be. However, it is hoped that this new model will strengthen the oil reserve system and enhance the country’s energy security.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
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