India strategise to take advantage of low prices for oil from Saudi Arabia and the United Arab Emirates to top up its strategic petroleum reserves (SPR), two of the sources familiar with the matter said on Monday.
As the impact of Coronavirus pandemic has decreased demand, the global oil prices have fallen around 40 per cent in March. Moscow refused to back deeper output cuts at a meeting of the Organization of the Petroleum Exporting Countries and its OPEC+ allies while supplies are still growing.
“They will increase output while cutting prices, giving big consumers the chance to fill up at discounted prices,” said leading OPEC producers Saudi Arabia and Abu Dhabi.
“It is an opportune time for us and for them (Abu Dhabi National Oil Company and Saudi Aramco) to finalise the deals and fill the SPRs...If there is any delay, we might fill the SPRs on our own,” said an official familiar with the matter, asking not to be named.
“The oil ministry has written to the finance ministry to release about 48-50 billion rupees to buy oil in 8-9 very large crude carriers for filling the storage,” said a second source, who also requested anonymity.
Indian Strategic Petroleum Reserves Ltd (ISPRL) and India’s oil and finance ministry refused to give any immediate comment, while ADNOC and Saudi Aramco also refused to share any information.
Being as the world’s third biggest importer and consumer of oil, India imports about 80 per cent of its oil needs. India has strategic storage at three different locations in southern India which has capacity to store 36.87 million barrels of oil or about 5 million tonnes to protect against supply disruption.
ISPRL signed MoU with Saudi Aramco for the lease of a quarter of Padur SPR. The lease let the national oil companies to store their oil, some of which will be catering to India’s strategic needs, while they can sell the rest to Indian Refiners.
“Four compartments of Padur have the capability of holding around 4.6 million barrels each. The ISPRL has received 1 VLCC with Arab Mix to fill one compartment and will get a second VLCC in April.” a third source said.