Strategic oil reserves help India save ~5K cr

India has saved ~5,000 crore in foreign exchange after it capitalised on the global low oil prices to fill its underground strategic oil storage to shore up insurance against any supply or price disruption, the Petroleum Ministry said on Wednesday.

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 Mangaluru and Padur in Karnataka and Visakhapatnam in Andhra Pradesh by the government, state-owned oil firms were in April asked to buy import oil when global rates fell to a two-decade low. "Taking advantage of low crude prices due to the COVID-19 situation, India filled its strategic reserves to full capacity," the ministry said in a tweet adding this led to a forex saving of ~5,000 crore. Oil prices globally had slumped after coronavirus pummeled demand.

The storages at Mangaluru 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 ministry said crude and LNG sourcing has been further diversified to strengthen India's energy security. Indian Oil Corp (IOC), the nation's largest oil firm, in 2019-20 entered into a long-term contract for sourcing crude oil from the USA. It also signed a first-ever term contract for importing 2 million tonnes of Urals grade crude oil from Rosneft of Russia in 2020, the ministry.