India has decided to commercialize half of its existing strategic petroleum reserves (SPR) as the country seeks to increase private participation in building new storage facilities, two government sources told Reuters on Thursday.
He said the change in policy was approved by the federal cabinet this month. Allowing the commercialization of the SPR reflects a model adopted by countries such as Japan and South Korea that allows private lessees, mostly oil majors, to re-export crude.
India, the world’s third largest oil importer and consumer, imports more than 80 percent of its oil needs and is building strategic storage to store five million tonnes of oil at three locations in the country’s southern part to avoid supply disruptions. has done.
He said private entities taking storage on lease would be allowed to re-export 1.5 million tonnes of oil stored in the caves in case Indian companies refuse to buy crude.
He said the Indian Strategic Petroleum Reserves Ltd, the company which is accused of manufacturing the SPR, would be allowed to sell one million tonnes of crude oil to local buyers.
Abu Dhabi National Oil Company (ADNOC) has leased 750,000 tonnes of oil storage at the 1.5 million tonnes Mangalore SPR.
Last year, India allowed ADNOC to export half of its oil at Mangalore SPR as the Middle Eastern oil major found it difficult to sell oil to Indian refiners.
He said India plans to create strategic storage for about 6.5 million tonnes of crude oil at Chandikhol in Odisha and Padur in Karnataka to provide an additional 12 days cover of net oil imports.
He said earlier this month the cabinet also decided to provide financial assistance of Rs 80 billion, equivalent to about 60 per cent of the estimated cost, for the construction of the two new SPRs.
ISPRL will soon float a preliminary tender for the construction of new reserves. “Anyone who wants less federal support will be considered to participate in the new caves,” a source said.