Industry
India eyes storing its oil in Japan, South Korea, Singapore
Summary
- This is the not the first time the government is considering storing India's crude outside the country. In 2020, India and the US had signed a memorandum of understanding to begin cooperation on strategic petroleum reserves operation and maintenance.
New Delhi: State-run Indian Strategic Petroleum Reserves Ltd (ISPRL) is considering taking storage space on rent in southeast Asia to store crude oil. It is looking in particular at Singapore, Japan and South Korea for their strategic, logistical and economic viability, said two people in the know of the developments.
The commercial viability of the reserves would be key to deciding where to store the oil. The move is in line with achieving India's energy security.
"In order to increase its strategic reserves, India has been looking at various models, including hiring capacities abroad. Locations which would be finalized need to be commercially viable in terms of accessibility," the person said, adding that it would have to be ensured that the renting charges are reasonable and do not surpass transportation cost.
This is the not the first time India is considering storing crude outside the country. In 2020, India and the US had signed a memorandum of understanding to begin cooperation on strategic petroleum reserves operation and maintenance, including exchange of information and best practices.
A joint statement on ‘U.S.-India Strategy Energy Partnership’ released after a virtual ministerial meeting of the U.S.-India Strategic Energy Partnership (SEP) had said: “They also discussed the possibility of India storing oil in the U.S. Strategic Petroleum Reserve to increase their nation’s strategic oil stockpile." The meeting was chaired by the then US secretary of energy Dan Brouillette and the erstwhile Indian union petroleum minister Dharmendra Pradhan.
"There are sites in Japan, South Korea and Singapore which are being considered. However, it will have to be seen how viable are they and things would have to work out," said another person in the know of the latest developments.
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Queries sent to ISPRL, the petroleum ministry, and the embassies of Japan, Singapore and the Republic of Korea in New Delhi remained unanswered till press time.
The second person said that among the oil-rich West Asian countries, the reserves in the United Arab Emirates may be looked at as they are better-located than those in other countries in the region, given that they are not beyond the Strait of Hormuz which has been under attack amid the ongoing turmoil in the region.
ISPRL has existing crude storage capacity of 5.3 million tonnes
ISPRL has an existing crude storage capacity of 5.3 million tonnes, including 1.33 million tonnes in Visakhapatnam (Andhra Pradesh), 1.5 million tonnes in Mangaluru and 2.5 million tonnes in Padur (both Karnataka). India is constructing 6.5 million tonnes of storage at Chandikhol in Odisha and Padur.
Strategic petroleum reserves can be be used in times of supply disruption or emergency such as war or a global geopolitical situation.
The Abu Dhabi National oil Company (ADNOC), the national oil company of the UAE, joined the Phase-I of the India’s SPR programme and has stored 5.86 million barrels of its crude in Mangalore. In 2018, it signed another MoU with ISPRL to explore storing ADNOC crude oil at ISPRL’s underground oil storage facility at Padur, which has a 2.5 million tonne capacity.
On 16 June, Mint reported that the Centre is in discussions with Norwegian energy giant Equinor to secure its participation in India’s strategic petroleum reserves (SPR), as part of efforts to enhance the energy security of the world’s third-largest energy consumer.
In February, ISPRL Managing Director LR Jain had said that the government has decided to lease out around 1 million tonnes of vacant strategic crude oil storage capacity to Indian and foreign companies.
The move to look for capacities for oil reserves abroad will also help India achieve the International Energy Agency's (IEA) required criteria of ensuring oil stock levels equivalent to no less than 90 days of the country's net imports.
According to the IEA website, member countries have substantial flexibility in how they meet the stockholding obligations, which can include stocks held exclusively for emergencies and those held for commercial purposes, both in the form of crude oil and as refined products, as well as holding stocks in other countries under bilateral agreements.
In February, the IEA announced that it would start talks with India for its full membership. India, which joined the IEA as an association country in 2017, sent a formal request for full membership in October 2023.
In a report in January, S&P Global had noted that India's total petroleum storage capacity is much lower than the levels held by some member countries of the IEA, and rising geopolitical risks and an anticipated growth in refining capacity are prompting the country to accelerate efforts to expand storage in coming years.
Former minister of state for petroleum and natural gas Rameswar Teli told Parliament in February that the strategic petroleum reserves of ISPRL provide for about 9.5 days of crude oil requirement.
"In addition, oil marketing companies (OMCs) in the country have storage facilities for crude oil and petroleum products for 64.5 days. Hence, current total national capacity for storage of crude oil and petroleum products is 74 days. Government of India explores various options on an ongoing basis for increasing this storage, including through public private partnerships," he had said.
