Global oil traders keen on India’s strategic crude reserves2 min read . Updated: 17 Oct 2018, 04:58 AM IST
Vitol, Trafigura and Glencore are interested in filling up the existing reserve at Padur under the first phase
New Delhi: In what will boost India’s energy security efforts, global oil traders such as Vitol Group, Trafigura Group Pte. Ltd and Glencore Plc have showed interest in partnering the country for its strategic crude oil reserves.
As part of India’s evolving energy security architecture, the ministry of petroleum and natural gas is launching the road show for the second phase of Indian Strategic Petroleum Reserves on Wednesday.
“Vitol, Trafigura and Glencore are interested in filling up the existing reserve at Padur under the first phase," said a person aware of the development, requesting anonymity.
Strategic crude oil reserves, which are typically state-funded and meant to tackle emergency situations, allow a country to tide over short-term supply disruptions. International Energy Agency (IEA) members maintain emergency oil reserves equivalent to at least 90 days of net imports.
India has an existing storage capacity of 5.3 million tonnes (mt) at Visakhapatnam (1.33mt), Mangaluru (1.5 mt) and Padur (2.5mt). The National Democratic Alliance (NDA) government in June approved construction of an additional 6.5mt of strategic crude oil reserves. These facilities together will help support 22 days of India’s crude oil requirements.
“In order to explore feasibility of commercialisation of the Phase I SPR at Padur (2.5 MMT) and the proposed Phase II SPRs at Chandikhol, Odisha (4.0 MMT) and Padur II, Karnataka (2.5 MMT), it is planned to solicit investment partners and pursue the initiatives of Phase II SPRs (strategic petroleum reserves) through PPP (public-private-partnership) mode of implementation for construction, filling, and operation respectively and also filling and operation of the existing Phase I SPR at Padur," the petroleum ministry said in a statement on Tuesday.
Vitol Group, Trafigura Group Pte. Ltd and Glencore couldn’t be contacted immediately.
Such reserves will help India, the world’s third-largest oil importer, to manage supply risks. The development comes at a time of growing uncertainty in global oil markets, driven by tensions between the US and Venezuela, and US demands for a global end to imports of Iranian oil by early November.
“To elicit interest and seek feedback from prospective investors, it is planned to conduct road shows. Based on the evinced interests, a suitable model for on-boarding of investors/PPP partners will be prepared for an international competitive bidding for wider participation," the government statement added.
Petroleum minister Dharmendra Pradhan said oil prices have jumped 50% in dollar terms and 70% in rupee terms since last year. While Brent prices were trading at $80.20 per barrel, traders are betting on crude prices to cross the $100 mark yet again.
Abu Dhabi National Oil Co. (Adnoc), the state-run oil company of the United Arab Emirates (UAE), is the only one to commit to India’s crude oil reserve programme till date. The oil storage facility will enable Adnoc meet market demand across Asia at a time when the global energy architecture is changing, with buyers at the centre of growth plans of oil majors. Adnoc, the world’s 12th largest producer, produces 3.5 million barrels per day.
Of the strategic crude oil storage facility built by India, 5.86 million barrels will be supplied by Adnoc that can be used during an emergency. ISPRL has an agreement with Adnoc under which the latter will store crude at its own cost. The agreement was signed during Prime Minister Narendra Modi’s visit to the UAE in February.