India’s Finance Ministry has canceled a ₹50 billion ($602 million) plan to boost the country’s strategic crude oil reserves, citing market volatility and the possibility of further price declines.
Instead of buying at current levels – Brent crude has already fallen by about a fifth from its September peak, and could fall further if supplies remain abundant – the ministry is asking state-owned companies to Indian Strategic Petroleum Reserves Limited The empty underground storage is to be leased to refiners and global oil companies, according to people familiar with the matter. He asked not to be named because the discussion is not public.
An oil ministry spokesperson did not immediately respond to text messages seeking comment, while a finance ministry spokesperson did not respond to an email seeking comment.
India has limited oil storage capacity, with room for only 39 million barrels of crude — barely enough for eight days of the country’s consumption — to use in emergencies. It filled storage in 2020 when Brent crude prices fell, but has since released about a third of that oil to local refiners.
The ministry’s decision not to replenish its reserves, unlike other big consumers, comes as New Delhi seeks to reduce its fiscal deficit to 5.9% of its GDP in the fiscal year to March from 6.4% a year earlier. % Was. It has sought to lease space instead, but refiners have so far expressed limited interest.
This could mean underground storage caverns will remain empty until market conditions change, the people said.
The South Asian nation stores its strategic oil reserves in three locations. A combined 13.5 million barrels of storage space in Visakhapatnam and Mangalore is currently vacant, the people said.
One of two 5.5 million barrel caverns at the Mangalore site has been leased Abu Dhabi National Oil Company, The Finance Ministry has asked ISPRL to discuss the lease of the second unit with local refiners and Adnoc.
Instead of buying at current levels – Brent crude has already fallen by about a fifth from its September peak, and could fall further if supplies remain abundant – the ministry is asking state-owned companies to Indian Strategic Petroleum Reserves Limited The empty underground storage is to be leased to refiners and global oil companies, according to people familiar with the matter. He asked not to be named because the discussion is not public.
An oil ministry spokesperson did not immediately respond to text messages seeking comment, while a finance ministry spokesperson did not respond to an email seeking comment.
India has limited oil storage capacity, with room for only 39 million barrels of crude — barely enough for eight days of the country’s consumption — to use in emergencies. It filled storage in 2020 when Brent crude prices fell, but has since released about a third of that oil to local refiners.
The ministry’s decision not to replenish its reserves, unlike other big consumers, comes as New Delhi seeks to reduce its fiscal deficit to 5.9% of its GDP in the fiscal year to March from 6.4% a year earlier. % Was. It has sought to lease space instead, but refiners have so far expressed limited interest.
This could mean underground storage caverns will remain empty until market conditions change, the people said.
The South Asian nation stores its strategic oil reserves in three locations. A combined 13.5 million barrels of storage space in Visakhapatnam and Mangalore is currently vacant, the people said.
One of two 5.5 million barrel caverns at the Mangalore site has been leased Abu Dhabi National Oil Company, The Finance Ministry has asked ISPRL to discuss the lease of the second unit with local refiners and Adnoc.
