India plans new strategic oil reserve to enhance energy security
India, the world's third-biggest oil importer and consumer, imports more than 80% of its oil needs and is constantly diversifying its crude sources to mitigate the impact of geopolitical crises on its oil procurement.
State-run engineering consultancy Engineers India Ltd (ENGI.NS), opens new tab is doing feasibility studies to build the new reserves, Indian Strategic Petroleum Reserve Ltd's CEO L R Jain told Reuters. "In case of exigencies, we will be better prepared," he said.
India currently has strategic petroleum reserves at three locations - Mangalore, Padur and Vizag - in southern India to store up to 5.33 million tons of crude that could be tapped in the case of supply disruptions.
It plans to create a new 5.2 million-5.3 million ton reserve at salt caverns at Bikaner in the desert state of Rajasthan, and a 1.75-million ton facility at Mangalore in southern Karnataka state, he said.
It will also create a reserve in Bina, central Madhya Pradesh state, with capacity yet to be decided, he said.
After feasibility studies, the projects will require approval from the federal cabinet.
They will come in addition to a new 2.5 million-ton strategic petroleum reserve at Padur and a 4 million-ton facility at Chandikhol in eastern Odisha state that have already been approved.
India has over the years overhauled its policy on strategic petroleum reserves to allow private participation and commercialisation, mirroring the model adopted by countries such as Japan and South Korea which allow private lessees, mostly oil majors, to trade the crude.
"We are looking for 90 days of reserves," Jain said. "And Indian fuel demand is also rising, so we need additional storage."
Expanding oil storage capacity would also help India join the International Energy Agency, which requires its members to hold a minimum of 90 days of oil consumption.
India's storage capacity, including that held by companies and in transit, is currently sufficient to meet its fuel demand for 75 days.
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