With its local oil storage being full, India plans to store some low priced oil in the US. The plan is akin to a similar approach followed by Australia which has decided to keep an emergency oil stockpile by buying crude to store in the US Strategic Petroleum Reserve. Countries are increasingly resorting to offshore storage to take advantage of low oil prices. “We are exploring some possibility if we can store some of our investment in a different country. We are exploring the possibility in the USA if we can store some of the low priced oil,” Pradhan said, as per a Reuters report.
Oil prices after plummeting more than 40 percent hitherto in 2020 have started showing signs of picking up in the recent weeks. It can be partially attributed to the efforts by the Organisation of the Petroleum Exporting Countries and allies to reduce supply. Pradhan said India, which is the world's third biggest oil consumer and importer, had already filled its 5.33 million tonnes of strategic storage and parked about 8.5-9 million tonnes of oil on ships in different parts of the world, primarily in the Gulf.
The refiners in India have also filled their commercial tanks and pipelines with refined fuel and oil. Pradhan added that the stored oil and products amounted to about 20 percent of India's annual needs. India imports more than 80 percent of its oil requirements. The country plans to build new strategic storage to expand its capacity by 6.5 million tonnes. Pradhan said India was keen to have participation from global investors in building these facilities. India's fuel demand nearly halved in April to its lowest level since 2007 as a nationwide lockdown and travel curbs brought the economy to a standstill.
Till date in May, India's petrol and diesel demand is around 60-65 percent of what it was in the same month last year and in the month of June, fuel consumption is expected to return to the same level as June 2019, said Pradhan. It is important to note that India is the world’s third largest crude oil importer with an existing storage capacity of 5.3 million tonnes at Visakhapatnam, Mangaluru and Padur. This is operational and can support 9.5 days of net imports. In addition, the government has approved the construction of an additional 6.5 mt of strategic crude oil reserves at Chandikhol in Odisha and Padur in Karnataka.