Policy Change in India’s Crude Oil Inventory Management
- 19-Aug-2021 5:56 PM
- Journalist: Jaideep Kumar
In a major policy shift, India has started selling Oil from its Strategic Petroleum Reserves to state-run refiners in order to monetize its inventory assets by leasing out the space in the inventory to Oil companies.
In an earlier announcement made by Indian Strategic Petroleum reserves Limited (ISPRL) which is the entity which manages India’s Oil inventories, it was conveyed that India had changed its policy to lease out 30% of its total 37 million barrels capacity to Indian and foreign companies.
Last Year ISPRL stocked the Strategic Petroleum Reserves (SPR), and it needs to sell some of it to make way for leasing.
One of the companies leasing out SPR is the Abu Dhabi National Oil Co (ADNOC). The company has leased out two equal sized chambers at the Mangalore SPR which has 11 million barrel capacity.
In order to make way for completing the 30% leasing out, ISPRL is gradually releasing 8 million barrels from the SPRs to create space for state run Mangalore Refinery and Petrochemicals Limited and Hindustan Petroleum.
In this move, India is adopting a model similar to model adopted by countries such as Japan and South Korea in commercialization of SPRs.
India which is the third largest importer of Crude Oil which imports 80% of its oil needs is also expanding its SPRs. Two more facilities are in construction phase with one having a capacity to store 29 million barrels and other having a capacity of 18 million barrels.