NEWS

India to release 5 million barrels oil from strategic reserves in coordination with other buyers

ABOUT

• India’s strategic reserves are the effort of a broader plan to build an emergency stockpile with millions of barrels of crude oil, on the lines of the reserves that the US and its Western allies set up after the first oil crisis of 1973-74.
• 33 MMT(38 million barrels of crude oil) have been commissioned at three locations — Visakhapatnam (1.33 MMT), Mangalore (1.5 MMT), and Padur in Karnataka (2.5 MMT).
• These facilities can provide for about 9.5 days of India’s crude oil requirements based on 2019-20 consumption levels.
• The combined storage facilities of Oil Marketing Companies (OMCs) in the country can hold enough crude oil to meet 64.5 days of requirement, bringing the total national capacity for storage of crude oil and petroleum products to 74 days, according to the Centre.
• India is in the process of expanding its strategic petroleum reserve storage by 6.5 MMT at two locations — Chandikhol in Odisha (4 MMT) and Padur (2.5 MMT).
• The International Energy Agency (IEA) recommends that all countries hold crude oil stocks worth 90 days of imports.
• India imports about 85 per cent of its crude oil requirements.
• Crude oil from the reserves are to be released by an empowered committee constituted by the government, in the event of any supply disruptions from abroad. These include any natural calamity or unforeseen global event leading to an abnormal increase in prices.
• A release of 5 million barrels from strategic reserves would equate to about 13 per cent of India’s strategic petroleum reserves.
• A release of 50 million barrels of crude oil from the US strategic petroleum reserves would equate to about 8.3 per cent of the 604.5 million barrels of crude oil stored in US strategic petroleum reserves.