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AsianOil: India approves two new SPR sites

The Indian government has approved plans to build two underground crude oil storage facilities that will expand the country’s strategic petroleum reserve (SPR) capacity by 6.5mn tonnes.
The central government allocated INR2.1bn ($28.18mn) in fiscal year 2020-2021 to acquire the land needed for a 4mn tonne (43.98mn barrel) facility in Odisha State and a 2.5mn tonne (18.3mn barrel) facility in Karnataka State, Minister for Petroleum and Natural Gas Rameswar Teli told the Lower House on July 26.
“The Request for Proposal [RfP] for building these storage facilities is under finalisation. An amount of INR210 crore was allocated in the budget of FY2020-21 under Phase II for land acquisition, and same has been disbursed to ISPRL,” Teli said in a written reply.
However, Teli said the new storages would differ from existing state-run SPR capacity, as they would be operated under a public-private partnership model.
State-owned Indian Strategic Petroleum Reserve Ltd (ISPRL) operates three underground bunkers in Mangalore, Visakhapatnam and Padur, with 2.5mn tonnes, 1.5mn tonnes (11mn barrels) and 1.33mn tonnes (9.75mn barrels) of capacity respectively.
The Ministry of Petroleum and Natural Gas said the reserves at Mangalore, Visakhapatnam and Padur were “strategic in nature” and would be used when the “government decided”.
However, ISPRL head HPS Ahuja said this week that the government intended to commercialise the SPR, trading the oil as a hedge against price inflation. The Indian cabinet has signed off on plans for ISPRL to trade around 20% of SPR capacity as a hedge and lease another 30% to third parties, industry media outlet Argus quoted Ahuja as saying on July 26.
India is looking to expand its SPR capacity as the country’s dependence on imported oil grows, owing to a years-long slide in domestic output.
Indian oil production slipped again in June, shrinking 1.79% year on year to 2.48mn tonnes (606,000 barrels per day). Meanwhile, output for the quarter sagged 3.42% to 7.41mn tonnes (597,000 bpd). Production in the 2020-2021 year contracted by 5.22% to 30.49mn tonnes (612,000 bpd).