Strategic reserves are an accumulation of valuable resources. These resources are stockpiled mostly by the government of a country to make up for the scarcity of a commodity during unprecedented events.
With the global recession looming around the corner and the inflation rate achieving newer heights, it is no doubt that markets are at a greater risk of volatility. The major concern of a nation in these situations is the basic security of its people. For a rising economy, energy security is paramount.
CAPACITY OF INDIAN RESERVES
Oil Industry Development Board (OIDB) functions under the Ministry of Petroleum and Natural Gas (MoPNG). Its subsidiary Indian Strategic Petroleum Reserves Limited owns and operates all the petroleum reserves of India. Currently, there are three Strategic Petroleum Reserves. These are underground locations in Mangalore, Visakhapatnam, and Padur (Udupi, Karnataka). The combined capacity of these three facilities is 5.33 MMT (million metric tonnes).
Visakhapatnam has a capacity to store about 1.33 MMT of crude oil, and Padur has a capacity of 2.5 MMT. In Padur, an additional storage capacity expansion project of 2.5 MMT is under pipeline. Mangalore has a storage capacity of 1.5 MMT. Moreover, a fourth site is under construction in Chandikhole in Odisha which will have a capacity of 4 MMT.
In Indian refineries, more than 60 days of crude oil storage is maintained at any point in time. This means that if global supply chains are ruptured, or in any unusual event India can rely on its strategic crude oil for about 75 days.
WHEN THE USA TRIED TO COUNSEL INDIA
India was advised by the USA to release its strategic crude oil reserves to make up for rising oil prices in early 2022. This transpired as a result of the Russian-Ukraine conflict and many countries were running after to secure stable and reliable oil deals. Earlier, when Indian firms could not secure oil deals at reasonable rates the USA tried to counsel India on how to manage its energy security. But later due to Russian discounted oil the situation eased.
This step has received flak from USA and Ukraine. A wrong notion was pictured by the western media some of it calling as a step by India to fuel the war by doing business with Russia.
The strategic reserves of Petroleum of India are key storage reserves that are fully stocked during the steady markets and normal trade conditions. This means that any economy buys more oil when the oil is cheap. These reserves are released under unstable conditions. India’s current strategic petroleum reserves can last for approximately 10 days.