Kuwait Petroleum Company (KPC) is considering storing crude oil in India’s underground caverns as part of the second phase of the Indian government’s plan to enhance its strategic petroleum reserves.
The external affairs ministry confirmed this development in response to a parliamentary committee’s inquiry on India-GCC cooperation.
Phase Two
The second phase of India’s Strategic Petroleum Reserve (SPR) aims to strengthen energy security by ensuring adequate crude storage for emergencies.
India’s effort to expand its strategic reserves is crucial for mitigating the impact of geopolitical tensions, such as the disruption in oil supplies witnessed during Russia’s invasion of Ukraine in 2022.
In November 2022, the Indian government shared the opportunity for KPC to participate in the second phase of SPR with the company.
KPC expressed interest in utilizing the facilities managed by the Indian Strategic Petroleum Reserve Ltd (ISPRL).
The external affairs ministry’s recent report highlighted this collaboration, along with discussions involving other GCC nations like Saudi Aramco and the UAE’s Abu Dhabi National Oil Company (ADNOC).
Expansion of India’s Strategic Reserves
India’s efforts to expand its strategic reserves include the construction of new caverns in Odisha and Karnataka.
In 2021, the union cabinet approved phase II of the SPR programme, which involves the development of storage facilities at Chandikhol, Odisha (4 million metric tons) and Padur, Karnataka (2.5 million metric tons) under a public-private partnership model.
The ISPRL has been actively engaging with GCC countries, offering them the opportunity to participate in this expansion.
Existing Partnerships and New Engagements
ISPRL’s current network includes underground storage caverns at Visakhapatnam, Mangalore, and Padur, with a total capacity of 5.33 million tons.
ISPRL also works with various global partners to store critical reserves.
Notably, ADNOC, which participated in the first phase of the SPR, stores 5.86 million barrels of crude oil at the Mangalore facility.
In 2018, ADNOC signed an additional memorandum of understanding (MoU) with ISPRL to explore further storage options at Padur.
GCC’s Role in India’s Energy Security
The Indian government’s strategy aims to deepen energy cooperation with GCC countries. These nations supply around 35% of India’s crude oil and 70% of its natural gas imports.
The parliamentary panel recommended that India actively engage with these nations. The goal is to secure their involvement in the second phase of the SPR programme.
In response, the external affairs ministry revealed that India is also pursuing long-term contracts with Oman, a key oil supplier.
Strategic Engagement with Oman
In line with these efforts, India is eyeing a term contract with Oman, which ranks as the 12th largest supplier of oil to India.
The move coincides with ongoing free-trade negotiations between the two nations, which are expected to conclude soon.
Furthermore, India is expanding its strategic storage initiatives beyond national borders.
ISPRL signed an MoU with Oman Tanking Terminal Company LLC (OTTCO) in June 2023. The MoU aims to explore the possibility of partnering in the Ras Markaz project, a large oil storage facility in Oman.
The venture would enable India to secure strategic reserves outside its territory, enhancing its energy security.
Conclusion
India is expanding its strategic petroleum reserves as part of a broader strategy. This aims to ensure a stable and diversified energy supply. It also seeks to strengthen diplomatic and economic relations with key energy-producing nations in the GCC.
As reported by livemint.com, India is deepening cooperation with these countries. This effort not only secures its energy needs but also fosters long-term partnerships in the region.
