India Saved Rs 5,000 Crore By Filling Strategic Reserves With Low-Priced Oil: Dharmendra Pradhan
India saved over Rs 5,000 crore when the country in April-May used two-decade low international oil prices to fill up its three strategic underground crude oil storages, Petroleum Minister Dharmendra Pradhan said on Monday.
India, the world's third-biggest oil importer, has built strategic storages in underground rock caverns at three places to meet any contingency.
"Taking advantage of the low crude oil prices in the international market, India purchased 16.71 million barrels of crude in April-May, 2020 and filled all the three Strategic Petroleum Reserves created at Visakhapatnam, Mangalore, and Padur," Pradhan said in a written reply to a question in Rajya Sabha.
The average cost of procurement of crude oil was $19 per barrel, as compared to $60 a barrel prevailing during January 2020.
This helped save $685.11 million or Rs 5,069 crore, he said.
While the 5.33 million tonnes of emergency storage -- enough to meet India's 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 were in April asked to buy crude oil when global rates fell to a two-decade low.
Oil prices globally had slumped after the coronavirus pandemic pummeled demand.
The storages at Mangalore and Padur were half-empty and there was some space available in Vizag storage as well. These were filled by buying oil from Saudi Arabia, the UAE and Iraq.
The Strategic Petroleum Reserve entity of India built the underground storages at Mangalore and Padur in Andhra Pradesh and Visakhapatnam in Andhra Pradesh as insurance against supply and price disruptions.
Mangalore storage has a total capacity of 1.5 million tonnes. Of this, half had previously been hired by Abu Dhabi National Oil Co. to store its crude oil. The remaining half was in April/May filled by oil brought by state-owned oil firms.
Padur, the biggest of the three storages, has a total capacity of 2.5 million tonnes (about 17 million barrels). ADNOC had in November 2018 signed up to hire half of this capacity but never actually stored oil in it. At present, government-sourced crude fills up half of the Padur capacity, and the remaining 1.25 million tonnes of crude oil was sourced from Saudi Arabia.
The 1.33 million tonne Visakhapatnam storage had a small amount of unfilled space which was filled with Iraq crude oil.
India meets 85 per cent of its oil needs through imports. Its refiners maintain 65 days of crude storage, and when added to the storage planned and achieved by ISPRL, the Indian crude storage tally goes up to about 87 days.
This is very close to the storage of 90 days mandated by International Energy Agency for member countries.