India is charting a significant milestone in its energy security strategy, with plans underway to establish its maiden privately managed strategic petroleum reserve (SPR) by 2029-30. The Chief Executive of Indian Strategic Petroleum Reserves Ltd (ISPRL) disclosed that the operator would be granted the liberty to engage in trading all stored oil, reflecting a departure from previous approaches.
Emulating models seen in countries like Japan and South Korea, where private entities, predominantly oil majors, have the autonomy to trade crude, India aims to adopt a fully commercial SPR framework. Presently, India has embraced only partial commercialization for its three existing SPRs situated in southern India, boasting a collective capacity of 36.7 million barrels.
The ambitious plan encompasses the construction of two new SPRs: an 18.3 million barrels cavern in Padur, Karnataka, followed by a 29.3 million barrels SPR in eastern Odisha. Private partners will be empowered to engage in local oil trading activities within these facilities, although the government retains the prerogative to access oil in the event of a shortage, as affirmed by ISPRL’s chief executive L.R. Jain.
In a bid to assess interest from both domestic and global entities, ISPRL recently issued a tender for the Padur SPR project. Jain expressed optimism in awarding the tender by September, aiming for a completion timeline of 60 months from inception. Given India’s status as the world’s third-largest oil importer and consumer, the expansion of SPR capacity assumes critical importance in safeguarding against global supply disruptions and price volatility.
Moreover, augmenting oil storage capacity is pivotal for India’s aspiration to join the International Energy Agency (IEA), necessitating members to uphold a minimum of 90 days of oil consumption. Although India’s current oil stocks, inclusive of SPR volumes, fulfill approximately 66 days of consumption, ISPRL envisages an investment of about 55 billion rupees ($659 million) for the Padur SPR project, with up to 60% funding from the federal government.
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