India is capitalizing on low global oil prices to fill its underground strategic oil reserves, with the first shipload of 1 million barrels of crude oil from the UAE arriving at Mangalore as part of efforts to shore up supplies to meet any supply or price disruption.
While the 5.33 million tonne of emergency storage — enough to meet its oil needs for 9.5 days — was built in underground rock caverns in Mangalore and Padur in Karnataka and Visakhapatnam in Andhra Pradesh by the government, state-owned oil firms have been asked to buy oil at cheaper rates from the market and fill them up.
“Under the guidance of MoP&NG, IndianOil is importing crude oil to strengthen India”s Strategic Petroleum Reserves while taking advantage of prevailing low crude prices. First such cargo of 1 million barrels of Upper Zakum Crude oil is being unloaded at Mangalore since yesterday,” IOC Director (HR) Ranjan Kumar Mohapatra tweeted.
Oil prices have declined by more than 60 per cent since January and benchmark crude still trading under USD 32 per barrel despite an unprecedented deal by the world”s biggest producers to cut output to steady a market pummeled by the coronavirus.
The storages at Mangalore and Padur are half-empty and there was some space available in Vizag storage as well. These will now be filled by buying oil from Saudi Arabia, the UAE and Iraq.
Oil Minister Dharmendra Pradhan, who attended the office for the first time since the nationwide lockdown was imposed, reviewed the reserve filling plans.
“Min. P&NG Shri @dpradhanbjp along with officials of MoPNG reviewed the ongoing operations of India”s Strategic Petroleum Reserves Program in the light of prevailing low crude oil prices,” the Ministry of Petroleum and Natural Gas (MoPNG) tweeted.
Pradhan has in the last few days held talks with his counterparts in Saudi Arabia and the UAE with a view to shoring up supplies.