Latest news with #ISPRL
Mint
26-06-2025
- Business
- Mint
Six more locations for monster reserves to stock up crude oil for India
India is doubling down to build new strategic petroleum reserves (SPR) at six proposed locations in the quest for energy security in a volatile world, two people aware of the development said. Emergency oil reserves that are stocked up while prices are low and released at times of exigencies are crucial for the world's third-largest energy consumer, which imports 85% of its crude requirements. The government has asked state-run Engineers India Ltd (EIL) to make detailed feasibility reports (DFRs) to build such new reserves at six locations, two people aware of the development said. Of these, one is proposed to be at the Mangalore Special Economic Zone in Karnataka and the other at salt caverns in Rajasthan's Bikaner. State-owned EIL, an engineering and consultancy firm focusing on the energy sector, is expected to submit its reports by the end of the year. 'EIL is doing DFR in six locations, which are close to the coast and refineries; including in Mangalore SEZ, and also salt caverns in Bikaner for strategic purposes. They haven't finalized it, with the study expected to be completed by the end of this year. The plan is to take India's reserve capacity to 90 days. That's the basic requirement," said one of the two people cited above requesting anonymity. Vital reserves During the West Asia conflict, Iran threatened to close the Strait of Hormuz in its territorial waters, through which a fifth of the world's oil cargoes pass. With India consuming 5.5 million barrels of crude oil per day (mbpd), the threat turned the spotlight on 1.5-2 mbpd oil that heads for India through this vital choke point, highlighting the need for an effective SPR programme. 'The information sought is confidential in nature, considering present environment," ISPRL's chief executive officer and managing director L.R. Jain said in an emailed reply to a query. An EIL spokesperson in an emailed response said, 'Above Information is correct to our knowledge. Please note that as part of Phase 1, a capacity of 5.33 mmt of capacity was added."'Feasibility is under advance stage of finalization," the EIL spokesperson added. Queries sent to a spokesperson of India's petroleum and natural gas ministry on late Tuesday remained unanswered. Conflict concerns SPRs are built underground in strategically chosen locations, often near refineries and ports, like rock caverns or salt caverns. India has been stocking up oil ever since opening its first SPR in Visakhapatanam a decade ago; however, the latest push comes against the backdrop of a 10-day conflict in West Asia, home to some of the world's biggest oil fields, exposing vulnerabilities on the energy front. Indian Strategic Petroleum Reserves Ltd (ISPRL), a state-run company, has built reserves totalling 5.33 million metric tonne (mmt) at Vishakhapatnam (1.33 mmt), Mangaluru (1.5 mmt) and Padur (2.5 mmt). The UAE's Abu Dhabi National Oil Co. (Adnoc) has partnered with India's strategic crude oil reserve programme, leasing capacity from the reserves. The government is also looking to secure participation from more global energy majors. In the second phase, SPRs of 6.5 mmt are planned in a public-private partnership mode, at Chandikhol in Odisha (4 mmt) and Padur in Karnataka (2.5 mmt). The six new locations being explored will be in addition to these. India currently has emergency reserves of crude oil and petroleum products equivalent to 77 days of net imports. This includes the capacity at SPRs, as well as the stocks maintained by state-run oil companies. For comparison, member countries of the International Energy Agency (IEA) maintain emergency stocks equivalent to at least 90 days of net imports. This assumes significance for India given its dependence on imported crude, and the fact that oil comprises about 30% of its total imports. In such a scenario, volatility and higher prices impact the country's trade deficit, current deficit and eventually, economic growth. Filling supply gaps India's current SPR capacity of 5.3 million tonnes is enough to meet just 9.5 days of its oil needs. According to data from the standing committee report on petroleum and natural gas submitted to the parliament in December 2024, 3.6 million tonne capacity was filled till October 2024. Crude oil approached nearly $80 per barrel as the Israel-Iran conflict broke out, before easing on Tuesday after the rivals reached a ceasefire. At the time of writing, the August contract of Brent on the Intercontinental Exchange was trading at $67.74 per barrel, higher by 0.92% from its previous close. Similarly, the August contract of West Texas Intermediate (WTI) on the NYMEX rose 0.87% to 64.93 per barrel. Prashant Vasisht, senior vice-president and co-group head, corporate rating at Icra Ltd said: "Given that India does not have a significant domestic production so far, having strategic reserves for emergency situations is important. Because, a geopolitical crisis may stretch from a few days to months, and India needs to ensure that any supply gap can be immediately filled to meet the demand for that period." He added that even considering energy transition, India's demand for petroleum products like petrol and diesel will continue to grow for at least the next 15 years. "So, the expansion of strategic reserve capacity is critical for India," Vasisht added. Amit Kumar, Partner and Leader, Energy & Renewables at Grant Thornton Bharat said, "India needs to increase its strategic reserves significantly to reach the targeted 90 days of storage, and to ensure that in case of a crisis, the reserves can be used. However, these reserves come with huge investment requirements, and the government may also look at getting in global players, which would help in hedging their investments." Expenditure According to industry estimates, building reserves of 1 mt requires capital expenditure of ₹2,500 crore. In November 2021, India agreed to release 5 million barrels from its reserves to cool global crude oil prices, in coordination with other major oil consumers including the US, China, Japan and South Korea. Also, India bought oil at $19 a barrel in 2020 to fill its reserves, and in the process, saved $685.11 million. 'Government and OMCs (oil marketing companies) evaluate, from time to time, the possibility of augmentation of storage capacities based on technical and commercial feasibility. Assessment of new sites for establishing additional petroleum reserves is a continuous process," minister of state (MoS) in petroleum and natural gas ministry Suresh Gopi informed the Lok Sabha in a written reply on 20 March, according to a government statement. India imports around 244 million tonnes of crude oil annually, accounting for over 85% of its total crude oil requirement. It has the option to source crude oil from 39 countries. In the backdrop of the West Asia crisis, New Delhi evolved an oil sourcing strategy that involves bypassing the Strait of Hormuz via two pipelines; tapping into the global reserves of Adnoc and Saudi Aramco; and significantly increasing imports from the US, as reported by Mint earlier. The two pipelines, which run east to west across the Arabian peninsula, was planned to be tapped if Iran closes the Strait. The first is Adnoc-operated 360-km Habshan-Fujairah strategic oil pipeline with a 1.5 million barrels per day (mbpd) capacity that opens to the Gulf of Oman; and the Saudi Aramco-operated 1,200-km East-West crude oil pipeline with a 5 mbpd capacity that offers access to the Red Sea.
Mint
20-05-2025
- Business
- Mint
India eyes cheap oil to refill strategic reserves amid geopolitical turmoil
New Delhi: India plans to take advantage of a drop in global crude oil prices to refill its strategic petroleum reserves (SPR), two people aware of the matter told Mint. The move comes amid renewed geopolitical risks and a fresh budgetary push to bolster the country's energy security infrastructure. India's existing SPR capacity stands at 5.3 million tonnes, enough to meet just 9.5 days of the country's crude oil needs. But as of October 2024, only 3.6 million tonnes were stored in the underground caverns, leaving a significant gap. Officials said the government is now looking to replenish the reserves, with Brent crude trading near a four-year low of around $65 per barrel. Read this | Counter-intuitive: Why Opec wants lower oil prices 'This is the right time to fill the reserves, as crude prices have softened considerably. It would result in significant savings for the exchequer," said one of the two people cited above. The government is also working to fast-track procurement, the second person said. Indian Strategic Petroleum Reserves Ltd (ISPRL), a government-owned entity, manages crude procurement and storage based on decisions by an empowered government committee. While state-run oil companies may assist occasionally, ISPRL largely handles purchases directly. Energy security is critical for India, which imports over 85% of its oil and 55% of its gas requirements. Fluctuations in global prices can significantly impact the country's import bill, stoke inflation, and widen the trade deficit. The urgency to refill the reserves has grown in the wake of a recent India-Pakistan standoff following a deadly terror attack in Pahalgam, Jammu & Kashmir, which killed 26 people. India responded with Operation Sindoor, targeting camps across the border. Although tensions have since eased, the episode underscored the importance of maintaining adequate supply buffers. The SPRs, located in Mangaluru, Padur and Visakhapatnam, combined with commercial oil stocks held by refiners and marketers, account for an estimated 70–72 days of crude inventory. However, this still falls short of the International Energy Agency's 90-day benchmark, required for full IEA membership. Queries sent to the petroleum ministry and ISPRL remained unanswered at press time. Crude bargains, budget resets fuel refill plan With crude prices low and new budget provisions in place, the government now aims to refill the reserves and expand capacity. The Centre had initially allocated ₹5,000 crore in FY24 for crude procurement by ISPRL, but the finance ministry deferred the spending. No provision was made in FY25 either. The amount has now been reallocated to FY26. In an October 2024 submission to the parliamentary standing committee on energy, the petroleum ministry had said, 'There is no provision for ISPRL's crude oil reserves this financial year. We will keep a provision for it in the next financial year," the ministry said. Crude oil prices fell sharply in April and early May, touching a low of $60.23 on 5 May before rebounding modestly. Brent crude was hovering around $65.5 per barrel in recent weeks, down 25% from its January peak, according to J.P. Morgan Research. In a 16 May report, the bank projected Brent prices would average $66 a barrel in 2025 and could fall further to $58 in 2026, noting that oil prices will remain under pressure amid ongoing macroeconomic and trade policy uncertainty. Read this | Tariffs set to impact India's petroleum product exports to the US India last tapped its reserves in November 2021, releasing 5 million barrels as part of a coordinated effort with other major oil consumers to cool soaring prices. It had bought crude at $19 a barrel during the 2020 crash to fill its reserves, saving ₹685.11 crore in the process. To bridge the current 18–20 day shortfall and meet IEA standards, India is also working to expand its SPR network. In July 2021, the cabinet approved two additional commercial-cum-strategic facilities: a 4 million tonne cavern at Chandikhol in Odisha and a 2.5 million tonne facility at Padur, Karnataka, under ISPRL Phase-II. However, land is yet to be allocated by the respective state governments. The tendering process for the Padur facility is currently underway, with bids invited in February this year, according to the ISPRL website. India's SPR programme has also attracted foreign interest. During Phase-I, Abu Dhabi National Oil Company (Adnoc) stored 5.86 million barrels of its crude in Mangaluru. In 2018, it signed another agreement to store crude at Padur. Kuwait Petroleum Corp. is also reportedly evaluating the option of storing oil in India under Phase-II. Read this | India in talks with Equinor for strategic petroleum reserves, securing long-term LNG deals The idea behind allowing foreign companies to hold stock in India's SPR is that they can store oil for sale to domestic refiners, as in the case of Adnoc. However, the Indian government retains the first right to the oil in case of an emergency. Meanwhile, the standing committee on petroleum and natural gas, chaired by lawmaker Dattatrey Tatkare, recently urged the government to move faster. 'The committee… recommends the Ministry to remain proactive towards arranging cheaper crude oil for strategic storage, particularly keeping in view the current geopolitical considerations," its March 2025 report said.
Reuters
19-02-2025
- Business
- Reuters
India looks to store oil in Oman, says ISPRL chief
NEW DELHI, Feb 19 (Reuters) - India is scouting for overseas oil storage and is in initial talks with Oman to lease a facility to hold about 5 million barrels of crude oil, said L.R. Jain, chief executive of Indian Strategic Petroleum Reserves Ltd (ISPRL). India, the world's third biggest oil importer and consumer, imports over 80% of its oil needs and is raising its strategic petroleum reserve capacity to protect against any global supply disruption. Advertisement · Scroll to continue Report this ad "If the talks with Oman materialise this would be the first time we will be holding strategic storage overseas," Jain told Reuters, adding his company is looking for storage in other Middle Eastern countries as well. ISPRL, which manages federal oil inventories, operates three SPRs in southern India - at Vizag in Andhra Pradesh, and Mangalore and Padur in Karnataka - with a combined capacity of about 5.33 million tons. India is keen to expand its oil storage capacity to be able to join the International Energy Agency (IEA), which requires its members to hold a minimum of 90 days of oil consumption. India has storage capacity to hold 74 days of crude oil and refined fuels. ISPRL's current oil reserves are enough to cover demand for 9.5 days while Indian companies have crude and refined fuel storage facilities for 64.5 days. Jain said ISPRL will build 4 million tons of strategic storage at Chandikhol in eastern Odisha state and a new 2.5-million ton facility at Padur in Southern India. He said the new underground SPRs at Chandikhol and Padur will be built in partnership with private companies with the federal government having the first right to the oil in the event of a shortage. ISPRL is also considering building a 5-million ton underground crude store, and gas reserves at Bikaner in desert state of Rajasthan, he said. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here.
Zawya
19-02-2025
- Business
- Zawya
India looks to store oil in Oman, says ISPRL chief
India is scouting for overseas oil storage and is in initial talks with Oman to lease a facility to hold about 5 million barrels of crude oil, said L.R. Jain, chief executive of Indian Strategic Petroleum Reserves Ltd (ISPRL). India, the world's third biggest oil importer and consumer, imports over 80% of its oil needs and is raising its strategic petroleum reserve capacity to protect against any global supply disruption. "If the talks with Oman materialise this would be the first time we will be holding strategic storage overseas," Jain told Reuters, adding his company is looking for storage in other Middle Eastern countries as well. ISPRL, which manages federal oil inventories, operates three SPRs in southern India - at Vizag in Andhra Pradesh, and Mangalore and Padur in Karnataka - with a combined capacity of about 5.33 million tons. India is keen to expand its oil storage capacity to be able to join the International Energy Agency (IEA), which requires its members to hold a minimum of 90 days of oil consumption. India has storage capacity to hold 74 days of crude oil and refined fuels. ISPRL's current oil reserves are enough to cover demand for 9.5 days while Indian companies have crude and refined fuel storage facilities for 64.5 days. Jain said ISPRL will build 4 million tons of strategic storage at Chandikhol in eastern Odisha state and a new 2.5-million ton facility at Padur in Southern India. He said the new underground SPRs at Chandikhol and Padur will be built in partnership with private companies with the federal government having the first right to the oil in the event of a shortage. ISPRL is also considering building a 5-million ton underground crude store, and gas reserves at Bikaner in desert state of Rajasthan, he said. (Reporting by Nidhi Verma Editing by Alexandra Hudson)
Muscat Daily
18-02-2025
- Business
- Muscat Daily
India eyes Oman for oil storage option
Muscat – India is considering Oman and other Middle Eastern countries as potential options for strategic oil storage while also expanding its reserves domestically. This move aims to accelerate India's storage capacity expansion amid geopolitical tensions, according to the chief executive officer of Indian Strategic Petroleum Reserves Ltd (ISPRL). India's efforts to increase storage capacity both at home and abroad will bring the country closer to meeting the strategic oil storage requirements set by International Energy Agency (IEA) in the medium to long term, L R Jain, CEO of ISPRL, said in an interview with S&P Global Commodity Insights during India Energy Week in New Delhi last week. 'Oman is one of the places we are considering. We could also look at other Middle Eastern destinations in the future to hold oil at SPRs (strategic petroleum reserves), although nothing concrete has been finalised,' Jain said. According to S&P Global Commodity Insights , India's current strategic petroleum reserves cover approximately 9.5 days of total net oil imports. Additionally, state-run oil companies maintain storage facilities for crude oil and petroleum products equivalent to 64.5 days of total net imports. This brings the country's overall storage capacity for crude oil and petroleum products to 74 days of total net imports. However, IEA member countries are required to maintain oil stock levels equivalent to at least 90 days of their net imports. 'Our expansion plans, both domestically and internationally, will help strengthen the SPR network. Our strategic vision is to significantly increase our SPR capacity beyond its current level,' Jain told S&P Global Commodity Insights . India aims to triple its strategic petroleum reserve capacity over the next decade, increasing it from the current level of under 5.5mn metric tonnes to more than 15mn metric tonnes within the next ten years, Jain added.
