Gulf News

India seeks $1.5b for emergency oil stocks

Country has built 5.33m tonnes of undergroun­d reserves in three locations

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India is seeking $1.5 billion (Dh5.5 billion) of investment­s from global oil producers and traders to build additional emergency crude reserves to act as a buffer against volatility in oil prices.

The plan is to build undergroun­d caverns that can hold a combined 6.5 million tonnes of crude at two locations, Indian Strategic Petroleum Reserves Ltd CEO H.P.S. Ahuja said. The state-run ISPRL will collaborat­e with private entities who will invest in the project, he said.

Getting investors to build storage facilities will lessen the strain on state finances and help Prime Minister Narendra Modi’s government meet budget goals, while expanding strategic petroleum reserves to shield the economy from oil-price volatility.

First right on reserves

India, which meets almost 85 per cent of its crude needs through imports, this month cut taxes on fuel sales to lower the burden of high oil prices on consumers. “We are taking the commercial model for building and filling the caverns, which will provide opportunit­y to the investor to make some profits,” Ahuja said. “India will continue to reserve first right on the crude stored in these caverns.”

The two new reserves include four million tonnes of storage at Chandikhol in the state of Odisha and a 2.5 million-tonne facility at Padur in Karnataka state.

India has built 5.33 million tonnes of undergroun­d reserves in three locations, including Padur, under an earlier phase that can meet 9.5 days of the country’s oil needs. The government purchased crude to fill the caverns in Visakhapat­nam in Andhra Pradesh and half of another facility in Mangalore in Karnataka, while leasing out the other half to Abu Dhabi National Oil Co.

Indian Strategic Petroleum Reserves, formed in 2006, is scouting investors to fill the caverns at Padur. It will hold roadshows in New Delhi, Singapore and London this month to draw investors for the new caverns as well as filling the Padur facility. “Strategic reserves are crucial for a growing consumer like India,” Ahuja said. “The new SPRs will be sufficient to cover the country’s oil needs for another 12 days.”

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