Govt. approves two more new Strategic Oil Reserves

  • Under the first phase of the Strategic Petroleum Reserves (SPR) programme, the Government of India through its special purpose vehicle, the Indian Strategic Petroleum Reserve Limited (ISPRL), has set up petroleum storage facilities with a total capacity of 5.33 Million Metric Tonnes (MMT) at 3 locations, namely (i) Visakhapatnam (1.33 MMT), (ii) Mangaluru (1.5 MMT) and (iii) Padur (2.5 MMT), and all the storage facilities have been filled with crude oil.
  • The petroleum reserves established under Phase-I are strategic in nature and the crude oil stored in these reserves will be used during oil shortage events, as and when declared so by the Government of India.
  • Under the second phase of the Petroleum Reserves programme, the government has approved the setting up of two additional commercial-cum-strategic facilities with a total storage capacity of 6.5 MMT underground storage at Chandikhol (4 MMT) and Padur (2.5 MMT) in July 2021, on PPP Mode. The request for proposal for building these storage facilities is under finalisation. An amount of Rs 210 crore was allocated in the budget for the financial year 2020-21 under Phase II for land acquisition, and the same has been disbursed to ISPRL, Minister of State for Petroleum and Natural Gas Rameswar Teli said.
  • Importance of Strategic Petroleum Reserves (SPR) programme
  • The Gulf War in 1990 led to a sharp rise in oil prices and a huge increase in India’s imports. During the post-1991 Indian economic crisis, foreign exchange reserves could barely finance three weeks’ worth of imports, while the government came close to defaulting on its financial obligations. India was able to address the crisis through policies that liberalized the economy.
  • However, India continued to be affected by volatility in oil prices. In 1998, former Prime Minister Atal Bihari Vajpayee administration proposed the creation of petroleum reserves as a long-term solution for managing the oil market. Three storage facilities were built in underground locations at Mangalore, Visakhapatnam and Padur. A total of 5.33 Million Metric Tonnes of storage capacity was created in the first phase.
  • Under Prime Minister Narendra Modi administration, the government has approved two additional commercial-cum-strategic facilities with a total storage capacity of 6.5 MMT in July 2021. This would raise India’s strategic reserve capacity to 11.83 MMT, and in times of crisis, India can manage its oil requirement for a specific time period.
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