BackDecoding SPR and its significance
Decoding SPR and its significance
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New Delhi: Strategic petroleum reserves are crude oil stocks that are held in reserve by a country or a private industry to meet energy supply shocks that could arise out of supply disruptions in crisis situations like war or natural disasters. SPR can be stored in underground salt caverns, rock caves, or depleted oil fields. Concrete storage is also used.
The US created its SPR following the oil-embargo in 1973-74. According to the US Department of Energy, at 727-million-barrels, it has the largest of government-owned emergency crude oil reserves in the world.
The IEA holds a total SPR of 4.1 billion barrels. This is based on a 2001 agreement that stipulates that each member country should hold a strategic petroleum reserve equal to 90 days of its previous year’s net oil imports. The members are Australia, Spain, France, Germany and Japan. Canada, Norway, Denmark and the UK were exempted from this as net exporter members, but Denmark and UK have since created their SPR’s as European Union members.
According to a Reuters report China has stocked SPR in three phases the first of which ended in 2009 with 100 million barrels of crude reserves to hold 20 days of China’s crude imports that reached 5.2 million barrels per day mark in April this year. Its second phase aims the 170 million barrels of mark for state crude reserves. The country has also started small-scale stockpiling of refined fuel. The country has also started creating SPR of refined fuel.
With 3.5% share in global consumption, India has also begun the augmentation of its SPR by 5 million metric tonnes (mt). At present, Indian Strategic Petroleum Reserves Ltd is setting up strategic crude oil reserves in Vishakhapatnam, Mangalore, Padur and a fourth in Rajasthan with a total capacity to hold 5mt to withstand two weeks of supply shock.
According to petroleum secretary S. Sundareshan, the additional facility should give India a 90-day supply reserve by 2011. However, considering the rise in demand in petroleum consumption from 112mt now to 135mt by 2012 as per the International Energy Agency (IEA) estimates this volume of SPR would be sufficient for only 78 days, the official said.
As reported in earlier story in Mint, the country is considering a joint response mechanism with countries like Japan, China, South Korea, and the US. The lookout for other storage locations is also on, an official who did not wish to be identified said, in response to a Mint query.
bhavna.r@livemint.com
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