Recently, the Ministry of Petroleum & Natural Gas provided valuable insights into the Strategic Petroleum Reserve Programme during a written reply in the Lok Sabha.
GS-III: Industry and Infrastructure
Dimensions of the Article:
- Strategic Petroleum Reserves
- Strategic Petroleum Reserves in India
Strategic Petroleum Reserves (SPRs)
- Strategic Petroleum Reserves (SPRs) refer to reserves of crude oil that nations maintain to guarantee a consistent crude oil supply, particularly in the face of geopolitical instability or disruptions in oil availability.
Purpose and Importance:
- SPRs serve the critical purpose of safeguarding against potential supply shocks caused by geopolitical events or other disruptions.
- These reserves play a pivotal role in ensuring a continuous flow of energy resources to support a country’s economic progress and advancement.
- Strategic Petroleum Reserves are stockpiles of crude oil held by countries.
- They aim to ensure a stable oil supply during geopolitical uncertainties and supply disruptions.
- These reserves are stored underground to maintain a reliable energy flow.
- Their main role is to support a nation’s growth and development by providing consistent energy resources.
Benefits of SPRs:
- Energy Security: SPRs provide a safety net against sudden supply disruptions, ensuring an uninterrupted energy supply.
- Economic Stability: By releasing oil during shortages, SPRs help stabilize domestic fuel prices and prevent price spikes.
- Geopolitical Preparedness: SPRs enhance a nation’s ability to respond to global energy dynamics and geopolitical developments.
- Emergency Response: SPRs contribute to disaster management by ensuring essential energy resources are available during emergencies.
India’s Strategic Petroleum Reserves (SPR) Infrastructure and Capacity
- Indian Strategic Petroleum Reserves Ltd. (ISPRL) was established by the Government of India as a Special Purpose Vehicle under the Ministry of Petroleum & Natural Gas in 2004.
- The SPR infrastructure is a critical component of India’s energy security strategy, aimed at safeguarding against disruptions in oil supply.
Existing SPR Facilities:
India’s current underground SPR sites possess a collective capacity of 5.33 Million Metric Tonnes (MMT) of crude oil. These facilities are strategically located across two states:
- Visakhapatnam, Andhra Pradesh: 1.33 MMT capacity
- Mangaluru, Karnataka: 1.5 MMT capacity
- Padur, Karnataka: 2.5 MMT capacity
- Taking advantage of favorable crude oil prices in April/May 2020, India efficiently maximized its existing SPR storage capacity. This tactical decision resulted in significant potential savings, estimated at approximately INR 5000 crore.
Expansion Plans and Commercial-Cum-Strategic Facilities:
In a noteworthy development, the Indian Government granted approval for the establishment of two additional commercial-cum-strategic SPR sites:
- Chandikhol, Odisha: 4 MMT capacity
- Padur, Karnataka: 2.5 MMT capacity (expansion)
- These facilities, with a total storage capacity of 6.5 MMT, will operate through a Public-Private Partnership (PPP) model.
Transfer and Timeline: Upon the conclusion of the 60-year Concession Period, the entity granted the concession will transfer the SPR, along with associated infrastructure like Single Mooring Points (SPMs) and onshore/offshore pipelines, back to the Government of India.
- The roots of India’s SPR initiative trace back to the Gulf War in 1990. Faced with a significant energy
- crisis during that period, India’s limited oil reserves posed a mere three-day buffer.
- Though the crisis was averted at the time, the persisting risk of energy disruptions remained a continuous concern.
- To address this energy security challenge, the administration under Atal Bihari Vajpayee proposed the establishment of strategic petroleum reserves in 1998.
- Presently, with escalating energy consumption, the rationale for developing and maintaining such reserves becomes increasingly compelling.
- In the realm of global strategic petroleum reserves, India’s infrastructure stands alongside other major economies:
- United States: 714 million barrels
- China: 475 million barrels
- Japan: 324 million barrels
- India’s commitment to strengthening its SPR infrastructure underscores the nation’s proactive approach to mitigating energy supply risks and ensuring stability in the face of global energy dynamics.