India has agreed to release 5 million barrels of crude oil from its Strategic Petroleum Reserves. This release will happen in parallel and in consultation with other major global energy consumers including the USA, People’s Republic of China, Japan and the Republic of Korea.
India strongly believes that the pricing of liquid hydrocarbons should be reasonable, responsible and be determined by market forces. India has repeatedly expressed concern at supply of oil being artificially adjusted below demand levels by oil producing countries, leading to rising prices and negative attendant consequences.
Indian Prime Minister Narendra Modi has been consistently reviewing the high petroleum and diesel prices domestically.
In a bid to control inflationary pressures, Government of India had reduced the ‘central excise duty’ on petrol and diesel by Rs. 5 and Rs. 10 respectively on 3 November 2021. It was followed by reduction in VAT on fuel by many state governments. These difficult steps, despite the high fiscal burden on the Government, were taken in order to provide relief to citizens.
Indian Strategic Petroleum Reserve Limited (ISPRL), a Government of India Special Purpose Vehicle, has established Strategic Petroleum Reserves (SPR) facilities with total capacity of 5.33 Million Metric Tonnes (MMT) at 3 locations, namely (i) Vishakhapatnam, (ii) Mangaluru and (iii) Padur. As per the consumption pattern of 2019-20, the total capacity is estimated to 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, thus the current total national capacity for storage of crude oil and petroleum products currently is 74 days.
Taking advantage of low crude oil prices in April/May 2020, the Strategic Petroleum Reserves have been filled to full capacity, leading to notional savings of approximately INR 5000 crore.
Under Phase II of the SPR Programme, the Government gave ‘in principle’ approval in June 2018 for establishing two additional SPR facilities with total storage capacity of 6.5 MMT at two locations namely (i) Chandikhol in Odisha (4 MMT) and (ii) Padur in Karnataka (2.5 MMT). As per the consumption pattern of 2019-20, 6.5 MMT SPR capacity is estimated to provide for about additional 12 days of India’s crude oil requirement.