India Shores Up Strategic Oil Reserves Amid Falling Oil Prices!

[Chanakya's_Chant]

Cheaper oil fuels India’s strategic reserves push - ​

India to operationalise 1.33 mt of strategic oil​

Seizing the opportunity provided by the global price of crude falling to less than $50 a barrel, India is planning to fill up a strategic storage facility at Visakhapatnam by the first fortnight of February.
​

Seizing the opportunity provided by the global price of crude falling to less than $50 a barrel, India is planning to fill up a strategic storage facility at Visakhapatnam by the first fortnight of February. This would be the first time the country is storing crude oil and the amount will be 1.03 million tonnes.

Strategic reserves are seen as vital for countries with high energy consumption levels and more so for India, which is heavily import-dependent when it comes to meeting its energy needs.

“We are just waiting for one specific approval. Once it comes, we are technically ready to fill the tank at Visakhapatnam,” said Rajan K Pillai, CEO & MD of Indian Strategic Petroleum Reserves (ISPRL) a special purpose vehicle owned by the Oil Industry Development Board.

Pillai said that at the current crude oil prices of around $50 per barrel and the rupee’s level of 61-62 to the dollar, filling up the facility at Visakhapatnam would cost about R2,400 crore and would be fully funded by the government. “India has set up among the cheapest storage facilities, which would cost about $17-18 per barrel,” Pillai said.

India imported 189 million tonnes of crude oil last fiscal, at a cost of $143 billion. Close to four-fifths of India’s oil consumption is met by imports. The construction of the proposed strategic storage facilities is being managed by ISPRL. To ensure energy security, the government has decided to set up 5 million tonnes (mt) or about about 39 million barrels equivalent strategic crude oil storages at three locations — Visakhapatnam, Mangaluru and Padur (near Udupi).

When fully filled, these reserves would be equivalent to 13 days of oil imports. The government is targeting an increase to 90 days of imports by 2020. Globally, the US has the maximum storage facility, which can last for about 90 days. After seeing strong volatility and price falls earlier in January, oil markets moved little last week with Brent prices range-bound between $47.78 and $50.45 a barrel.

The Visakhapatnam storage unit, built at a cost of Rs 1,038 crore, is divided into two compartments of 1.03 mt and 0.3 mt. The smaller compartment of 0.3 mt would be utilised by PSU refiner Hindustan Petroleum Corporation (HPCL), while the bigger section is meant for strategic reserves. The revised costs for the Mangaluru and Padur facilities are Rs 1,227 crore and Rs 1,693 crore, respectively, taking the total cost for the three projects to Rs 3,958 crore.

Oil prices rose on Friday after the death of Saudi Arabia’s king added more uncertainty to an oil market that has more than halved over the last six months. King Abdullah bin Abdulaziz died early on Friday and his brother Salman became king of the world’s top oil exporter. Brent crude futures were trading at $49.42 a barrel on Friday.

In 2013-14, India spent $143 billion on crude oil imports, which accounted for 32% of India’s total imports in the fiscal year. The strategic storage units are built in underground rock caverns on the east and west coasts so that they are readily accessible to the refining sector.

Underground rock caverns are considered the safest means of storing hydrocarbons.

Source:- Cheaper oil fuels India’s strategic reserves push | The Financial Express
India to operationalise 1.33 mt of strategic oil | mydigitalfc.com

 

[Fireurimagination]

Good move, do it fast

 

[Nilesh Singh]

Good move, do it fast

Good news

 

[MohitV]

and this is the ryt time for more exploration too

 

[Skywalker]

Good move but at the same time this increase demand will increase the price.

 

[trident2010]

Good move !!

 

[kbd-raaf]

Good move but at the same time this increase demand will increase the price.

Wow. Much logic.

 

[Brickwall]

gr8...but need to act faster

 

[Last Samuri]

smart move india they have the cash why not will price is low

 

[illusion8]

Good move but at the same time this increase demand will increase the price.

India imported 189 million tons last year plus another 36 million tons was locally produced - a mere 1 million tons isn't going to change global oil prices.

 

[Ind4Ever]

Cheaper oil fuels India’s strategic reserves push -
India to operationalise 1.33 mt of strategic oil

Seizing the opportunity provided by the global price of crude falling to less than $50 a barrel, India is planning to fill up a strategic storage facility at Visakhapatnam by the first fortnight of February.
​

Seizing the opportunity provided by the global price of crude falling to less than $50 a barrel, India is planning to fill up a strategic storage facility at Visakhapatnam by the first fortnight of February. This would be the first time the country is storing crude oil and the amount will be 1.03 million tonnes.

Strategic reserves are seen as vital for countries with high energy consumption levels and more so for India, which is heavily import-dependent when it comes to meeting its energy needs.

“We are just waiting for one specific approval. Once it comes, we are technically ready to fill the tank at Visakhapatnam,” said Rajan K Pillai, CEO & MD of Indian Strategic Petroleum Reserves (ISPRL) a special purpose vehicle owned by the Oil Industry Development Board.

Pillai said that at the current crude oil prices of around $50 per barrel and the rupee’s level of 61-62 to the dollar, filling up the facility at Visakhapatnam would cost about R2,400 crore and would be fully funded by the government. “India has set up among the cheapest storage facilities, which would cost about $17-18 per barrel,” Pillai said.

India imported 189 million tonnes of crude oil last fiscal, at a cost of $143 billion. Close to four-fifths of India’s oil consumption is met by imports. The construction of the proposed strategic storage facilities is being managed by ISPRL. To ensure energy security, the government has decided to set up 5 million tonnes (mt) or about about 39 million barrels equivalent strategic crude oil storages at three locations — Visakhapatnam, Mangaluru and Padur (near Udupi).

When fully filled, these reserves would be equivalent to 13 days of oil imports. The government is targeting an increase to 90 days of imports by 2020. Globally, the US has the maximum storage facility, which can last for about 90 days. After seeing strong volatility and price falls earlier in January, oil markets moved little last week with Brent prices range-bound between $47.78 and $50.45 a barrel.

The Visakhapatnam storage unit, built at a cost of Rs 1,038 crore, is divided into two compartments of 1.03 mt and 0.3 mt. The smaller compartment of 0.3 mt would be utilised by PSU refiner Hindustan Petroleum Corporation (HPCL), while the bigger section is meant for strategic reserves. The revised costs for the Mangaluru and Padur facilities are Rs 1,227 crore and Rs 1,693 crore, respectively, taking the total cost for the three projects to Rs 3,958 crore.

Oil prices rose on Friday after the death of Saudi Arabia’s king added more uncertainty to an oil market that has more than halved over the last six months. King Abdullah bin Abdulaziz died early on Friday and his brother Salman became king of the world’s top oil exporter. Brent crude futures were trading at $49.42 a barrel on Friday.

In 2013-14, India spent $143 billion on crude oil imports, which accounted for 32% of India’s total imports in the fiscal year. The strategic storage units are built in underground rock caverns on the east and west coasts so that they are readily accessible to the refining sector.

Underground rock caverns are considered the safest means of storing hydrocarbons.

Source:- Cheaper oil fuels India’s strategic reserves push | The Financial Express
India to operationalise 1.33 mt of strategic oil | mydigitalfc.com

Perfect .... Increasing reserve to 5 times the present size. And 40+ times later . Good governance .

Good move but at the same time this increase demand will increase the price.

Won't bhai it's very marginal in global trade but huge cache for India . Brilliant move I must say.

Ache Din Aye ?

gr8...but need to act faster

Ya ya . Our Indian instinct kicks in? Soon before the price goes up ya we will

 

[Dr Gupta]

Excellent move but need a bigger reserve and ONGC need to buy some foreign assets for the long term

 

[sancho]

Good move but at the same time this increase demand will increase the price.

Oil suppliers already try to artificially increase the price, by storing oil on large tankers at sea, to show an increased demand. On the other side we have the US that tries to hit Russia by reducing the price, so lets see what will have more importance to the price, but for India this surely is the perfect time to act and increase the strategic reserves.

 

[Chanakya's_Chant]

Exclusive: India makes first crude oil purchase for strategic reserve

A worker walks atop a tanker wagon to check the freight level at an oil terminal on the outskirts of Kolkata November 27, 2013.​

(Reuters) - India has bought the first oil for its strategic petroleum reserve (SPR), trade sources said on Monday, marking the start of a round of purchases by the world's fourth-biggest oil consumer to build up emergency stockpiles.

Oil prices have almost halved in the past year due to excess global production, leaving traders looking for any signs of new demand to help absorb the surplus.

The sources said state-refiner Indian Oil Corp (IOC.NS) bought a 2 million barrel cargo of Iraqi crude from Chinese trader Unipec, which will load in May for shipping to the first stage of India's SPR on the country's east coast.

In addition, state-refiners IOC and Hindustan Petroleum Corp Ltd (HPCL.NS) will buy another three Very Large Crude Carriers between them for the Vizag SPR storage site in Andhra Pradesh.

While the first 8 million barrels for Vizag are relatively small compared with the global market, totaling less than 10 percent of daily demand, India's purchases could ramp up later this year as the country completes construction of the next phase.

Two SPR sites, at Padur and Mangalore on India's west coast, will have a capacity of 29.3 million barrels and are expected to be ready by October.

India is heavily reliant on fuel imports, producing less than a third of the nearly 3.7 million barrels per day it consumed in 2013, data from the U.S. Energy Information Administration shows.

Its fast-growing economy has become the world's fourth-largest oil consumer after the United States, China and Japan.

China's own SPR purchases, which have helped support oil prices during the global supply glut, are expected to slow this year with commercial and strategic storage space almost full.

China's strategic stocks were estimated in January at more than 30 days' worth of crude imports. It plans to eventually build reserves of around 600 million barrels, or about 90 days of import cover.

India's SPR should cover approximately 13 days of imports when it is completed by the end of this year.

The east coast Vizag facility has two compartments of 7.55 million barrels and 2.20 million barrels, with the smaller to be used by HPCL for its 166,000 bpd refinery at the site.

The VLCC cargo Basrah IOC bought from Unipec, the trading arm of China's state-backed oil producer Sinopec, was purchased at a premium of 50-60 cents to the official selling price of the Iraqi grade, the sources said.

Separate from the SPR purchases, IOC has re-floated a tender seeking a million barrels of heavy grades for April first half loading, traders said. This tender will close on Tuesday with bids remaining valid till Wednesday.

Brent crude oil prices were down by around $1 a barrel on Monday near $55 a barrel, having fallen from above $110 a barrel in June.

(Reporting by David Sheppard; editing by Susan Thomas)

Source:- Exclusive: India makes first crude oil purchase for strategic reserve| Reuters