Global oil firms look to build Indian strategic reserve

Several major global oil and commodity trading firms have expressed interest in building India's new Strategic Petroleum Reserve (SPR), the government told the lower house of parliament on 3 August.

BP, Shell, Chinese state-controlled PetroChina, trading firms Trafigura and Vitol, Glencore and others indicated interest in building the 6.5mn t (47.6mn bl) phase two of India's SPR project during two roadshows held by the Indian government, minister of state for petroleum and natural gas Rameswar Teli told the Lok Sabha on 3 August.

Teli did not provide details of the roadshows, but the government had launched roadshows in October 2018 to attract investors, according to a press release.

Delhi had in 2021 given approval for a 4mn t facility in Chandikhol in Odisha state and a 2.5mn t reserve in Padur in Karnataka, as part of phase two of the reserves, to be constructed under public-private partnership. The country already has three storage facilities from the first phase with a combined capacity of 5.33mn t. The completion of phase two will take India's total SPR capacity to 11.83mn t.

The country imported 4.67mn b/d of crude during the April 2022-March 2023 fiscal year, according to data from the oil ministry, so a storage capacity of 11.83mn t is equivalent to over 18 days of cover.

The holder of the concession must transfer the SPR, along with single mooring point, onshore and offshore pipeline, to the government at the end of 60 years of concession period, an official press release said. But it did not provide further details.

The government also said it has the right to take first crude from the SPR in case of shortages. The country withdrew 5mn bl of crude oil from its strategic reserve in 2021 to supply state-controlled refiners as part of globally co-ordinated action against sharp increases in crude oil prices.

The Indian government has earmarked 50bn rupees ($604mn) in its budget for the April 2023-March 2024 fiscal year to rebuild the country's SPR. The amount set aside by the government for the refilling of India's SPR is multiple times the cumulative allocations made in previous budgets, and is more than twice the combined investment of about Rs19bn made by India in the past decade.

The government set up the Indian Strategic Petroleum Reserve (ISPRL) in 2005 to maintain India's strategic reserves of crude oil, and liberalised its oil policy in 2021, under which the ISPRL was allowed to commercialise 50pc of its reserves, of which 20pc could be used for trading and the remaining for leasing out capacity.

By Pranav Joshi