India Strategic Oil Reserve 

Mains Marks Booster     5th August 2023        
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Global strategic petroleum reserve: Understanding the Impact

  • The Impact of Global Oil Markets: The interconnectedness of the world's oil markets means that disturbances in one region can have a far-reaching impact on prices worldwide.
  • Managing Supply Disruptions: Countries with reserves can release a portion of their supplies during significant disruptions caused by politics or natural calamities, helping to stabilize prices.
  • Import-Export Balance: Nations are required to maintain reserves equal to their average annual imports of crude oil for 90 days, as per an agreement among IEA members.

Strategic Oil Reserves of India: Ensuring Energy Security

  • Developing Emergency Stocks: India aims to establish emergency stocks similar to the reserves established by the US and its Western allies after the 1970s oil crisis.
  • Exploring Salt Cavern-Based Reserves: Engineers India (EIL), a government-owned engineering consultancy firm, is researching the feasibility of creating salt cavern-based strategic oil reserves in Rajasthan.
  • Planned Storage Facility: If realized, India's first oil storage facility built inside a salt cavern would add to the existing strategic oil storage facilities in Andhra Pradesh, Mangaluru, and Padur.
  • Enhancing Energy Security: As India heavily relies on oil imports, strategic petroleum reserves (SPR) play a crucial role in ensuring energy security during emergencies or disruptions in the global supply chain. 

India's Current Strategic Oil Reserves: Capacities and Expansion

  • Current SPR Capacity: India's current SPR capacity is 5.33 million tonnes, equivalent to about 39 million barrels of crude, providing the country's oil needs for 9.5 days.
  • Expanding Capacity: India is expanding its SPR capacity by 6.5 million tonnes at Chandikhol in Odisha and Padur.
  • Management and Consultation: Indian Strategic Petroleum Reserve, a special purpose company under the Petroleum Ministry, manages India's strategic oil reserves, with EIL serving as the project management consultant.
  • Salt Cavern-Based Storage: Salt cavern-based storage, considered cost-effective and less labor-intensive than rock caverns, could significantly contribute to India's SPR.
  • Existing Rock Cavern Deposits: India currently has three strategically important oil deposits located in the rock caves of Mangaluru, Padur, and Visakhapatnam.
  • Rajasthan's Advantage: Rajasthan is chosen as the ideal location for the salt-based cavern petroleum oil reserve project due to its geological and infrastructure advantages. 

Rock vs. Salt Cavern Reserves

  • Salt caverns, created through solution mining, offer easier, quicker, and less expensive oil storage compared to excavated rock caverns.
  • These caverns provide natural impermeable barriers against hydrocarbons and are well-sealed, enabling efficient injection and extraction of oil.
  • The US Strategic Petroleum Reserve relies entirely on salt caverns, which are also suitable for storing other resources like natural gas and hydrogen. 

Potential for Crude Oil and Petroleum Storage in India

  • Rajasthan, with abundant salt deposits, emerges as the most suitable region for constructing strategic salt cavern storage facilities.
  • Existing infrastructure in Rajasthan, including a refinery in Barmer and crude pipelines, supports the creation of strategic oil reserves.
  • Collaboration between Engineers India (EIL) and Germany's DEEP.KBB GmbH aims to bridge the technical expertise gap for salt cavern-based storage. 

Programme for Strategic Petroleum Reserves: The Journey So Far

  • Emulating Western Allies: India's strategic oil reserves are part of the endeavor to establish emergency stocks similar to the US and Western allies' reserves after the 1970s oil crisis.
  • Authorization for Release: The government has the authority to release crude oil from reserves in the event of supply disruptions caused by natural disasters or abnormal price increases due to unforeseen global events. 

Conclusion: Strengthening Energy Infrastructure

  • Existing Storage Capacity: India's oil marketing companies have storage facilities for crude oil and petroleum products equivalent to 64.5 days of demand, in addition to the SPR's capacity to meet 9.5 days of oil requirement.
  • ADNOC's Contribution: The Abu Dhabi National Oil Company (ADNOC) has stocked around 0.8 million tonnes of crude oil in the Mangaluru strategic reserve as part of India's decision to commercialize its reserves.
  • Public-Private Partnerships: In the second phase of the strategy, the government plans to establish strategic reserves through public-private partnerships to maximize commercial potential and reduce costs. 
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