India And US Sign Mou To Develop Strategic Petroleum Reserve

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INDIA U.S PARTNERSHIP

Indian Strategic Petroleum Reserves Limited (ISPRL) is an Indian company responsible for maintaining the country’s strategic petroleum reserves. ISPRL is a wholly owned subsidiary of the Oil Industry Development Board (OIDB), which functions under the administrative control of the Ministry of Petroleum and Natural Gas.

ISPRL maintains an emergency fuel store of total 33 MMT (million metric tons) or 36.92 million barrels (5.870 million cubic metres) of strategic crude oil enough to provide 10 days of consumption
Strategic crude oil storages are at three underground locations in Mangalore, Visakhapatnam and Padur(Udupi, Karnataka).

India is moving to store oil in the US, the first time world’s third-largest oil guzzler is creating an emergency reserve abroad to take advantage of low prices and guard against possible supply disruptions.
“We have signed a MoU to begin co-operation on strategic petroleum reserves. We are also in an advanced stage of discussion for storing crude oil in US strategic petroleum reserve to increase India’s strategic oil stockpile,” oil minister Dharmendra Pradhan said

The move comes amid India’s deadly border standoff with China in Ladakh and signals New Delhi and Washington deepening their strategic bonding beyond defence. The US has emerged as India’s sixth-largest oil supplier since the first US crude shipment reached Paradipin Odisha in October 2017.

First one is to lease caverns with crude stockpile for a specific period of time when prices are low. The second one is to lease capacity and buy oil separately as and when prices drop to a level expected to yield handsome arbitrage later.

The stored oil can be sold at a profit when prices rise or brought to India for refining, depending upon what makes more economic sense or will reduce the cost of crude for India.
“It will all depend on the commercial terms that are finalised. It could be a mix of the two (options),”