Crude oil Prices Crash (Why india does not get benefit of its) – Free PDF

WHAT ABOUT OIL STORAGE?

• The country has limited Strategic Petroleum Reserve (SPR) capacities compared to the US, China, Japan and South Korea and it explains the missed opportunity.

WHAT U.S DID

• The US President Donald Trump said that USA is looking to add 75 million barrels (MB) of oil to the SPR.

INDIA’S PROBLEM

• But for India, which is the third largest consumer in the world, the whole SPR storage capacity comes to just 39 MB.
• So the country has the limitations when it comes to stocking up cheap crude for future.

AMERICAN CAPACITY

• The US can stock up to 730 MB of crude as SPR at its four sites with deep underground storage caverns created in salt domes along the Texas and Louisiana Gulf coasts.

COMPARISON

• India, meanwhile, has storage capacity nowhere near other Asian countries such as China (550 MB), Japan (528 MB) and South Korea (214 MB).

INDIA’S START OF THE SPR PROJECT

• India had begun its SPR projects in 2005 and spent over Rs 4,000 crore for the phase 1.
• The combined capacity of SPR in three locations in southern Indian –Vishakhapatnam, Mangalore and Padur(Karnataka) –is just over half full at present.

NOTES

• Strategic crude oil storages are at three underground locations in Mangalore, Visakhapatnam and Padur(Udupi, Karnataka).

2018

• In June 2018, the Narendra Modi administration approved the construction of a new storage facility in Chandikholeand doubling the capacity at Padur. This would raise India’s strategic reserve capacity to 12.33 million tonnes. This would raise the strategic reserve capacity to 15.33 million tons.
• Chandikho lstrategic oil reserve will have a capacity of 4 million metric tonnes entailing an investment of about Rs 6,500 crore. It will create 4,000 jobs.

MISSED OPPORTUNITY

• Though, the government has approved another 6.5 million mtof SPR under the second phase given the country’s reliance on oil, the capacity will only come up over next six to seven years, preventing the country to take advantage of the current oil prices.

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