India finally seems to be getting its act together for ensuring energy security by focussing on crude-oil storage capacities not only in the country but also acquiring access to capacities overseas including in the US.
“To make the most of the low crude-oil prices, India has initiated talks with the US to gain access to oil storage facilities in that country,” said a senior official, adding that this was also discussed at the recently held second ministerial meeting of the US-India Strategic Energy Partnership (SEP), which covered the entire gamut of bilateral energy issues.
In fact, after the meeting, Minister for Petroleum and Natural Gas and Steel Dharmendra Pradhan had said that the two sides have signed a Memorandum of Understanding to begin cooperation on operation and maintenance of strategic petroleum reserves, including exchange of information and best-practices.
They also discussed the possibility of India storing oil in the US Strategic Petroleum Reserve to increase their nation’s strategic oil stockpile. A Petroleum Ministry official in the know told BusinessLine that preliminary meetings have happened for accessing the facility in the US but talks are going to be held to work out the nuances, in the coming days.
This is mainly for the American oil which India will buy, the official said, adding that once the access is there, India, depending on the need, can either bring the oil home or sell it there itself. Modalities on capacity available and pricing will be worked out when the talks reach the final stages.
As regards to the MoU between the US Department of Energy and the Indian Ministry of Petroleum and Natural Gas concerning cooperation on strategic petroleum reserves, the official said: “We are at a nascent stage as far as strategic reserves are concerned. The US has been operating them for years, so we wanted to leverage their experience and expertise. Besides, in our country, even if we start work at phase-II of building capacities, it will take at least six years to complete. So, the opportunity of getting cheap crude should not be let go.”
Meanwhile, India Strategic Petroleum Reserves Ltd (ISPRL) has successfully filled the current capacities available in India. The capacities were filled by the national oil companies.
The bilateral hydrocarbons trade between India and the US alone touched $9.2 billion during 2019-20, accounting for 10 per cent of the overall bilateral trade. In fact, India is now the fourth-largest export destination for US crude and the fifth-largest for US LNG. The trend is expected to continue with Indian companies entering into more long-term contracts from this year.