India to open crude reserves to private market in bid to attract investment

Quantum Commodity Intelligence - Oil majors and traders will be allowed to sell oil from India's strategic petroleum reserve, the Indian government has decided, in a bid to attract private enterprise into building more storage tanks in the country, two sources have told Reuters.

India, which imports over 80 per cent of its oil needs, has strategic storage at three locations in southern India to store up over 5 million tonnes of oil to protect against supply disruption.

Earlier this year the government approved plans to more than double the SPR amount, to 11.83 million mt up from 5.33 million mt, using public-private partnership schemes to build new underground storage.

Oil companies that lease storage in India will be allowed to re-export 1.5 million tonnes of this strategic oil if Indian companies refuse to buy their crude barrels.

Indian Strategic Petroleum Reserves Ltd (ISPRL), a company charged with the building of SPRs, will also be allowed to sell 1 million tonnes of crude from the reserves to local buyers.

Meanwhile, the Indian government also plans to build strategic storage at Chandikhol in Odisha and Padur in Karnataka to store around 6.5 million tonnes of crude and provide an additional cover of 12 days of net oil imports.

Earlier this month, the Indian cabinet agreed to provide up to 80 billion rupees of financial support, equivalent to about 60% of the estimated cost, for building two new SPRs.

ISPRL will soon float an initial tender for building the new reserves.