Time to fill up India’s strategic oil reserves

Journal article

India’s energy consumption is rising, and it is highly dependent on imported crude oil. According to recent estimates, oil import dependence was 77 per cent in 2012; it is forecast to rise to 81–91 per cent by 2027, and reach 96 per cent by 2047 (‘Least Effort’ Scenario, India Energy Security Scenarios, 2047). In recognition of the risk of interruption to physical supplies, India began working towards a Strategic Petroleum Reserve (SPR) in 2008. The first phase of its oil storage facilities, with a capacity of 5.3 million tonnes (Mt) (38.85 million barrels) is likely to be ready for commissioning in the first half of 2015; construction on the second phase, with a capacity of 12.5 Mt (roughly 90 million barrels) has been approved by the government. The facility is being constructed by Indian Strategic Petroleum Reserves Limited (ISPRL), a ‘Special Purpose Vehicle’ owned by the government’s Oil Industry Development Board. While the cost of construction of the first phase has been US$635 million, the second phase is likely to cost US$2.2 billion.

Strategic Petroleum Reserves (SPR) guard against short-term energy supply disruptions and are therefore considered a leading way of enhancing a country’s physical supply security. IEA member countries are required to keep minimum oil stocks equivalent to 90 days of oil imports. Although oil stocks are generally not released to manage oil prices (the IEA’s intention is to stabilize the market and release stocks only in case of physical shortages), it may be possible to use the stored oil to offset a spike in oil prices, especially for developing countries which have administered oil prices.

Authors: Narula, K

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Oxford Institute for Energy Studies
• Journal: Oxford Energy Forum
• Issue: 99
• Pages: 10-12
• Publication date: 2015-03-09
• ISSN: 0959-7727
• Language: English
• Keywords: OIES