India may dip into its strategic oil reserves stored in underground caverns at Mangaluru, Paddur (near Udupi) and Visakhapatnam, after the drone strikes on Saudi Arabian Oil Co or Saudi Aramco’s facility over the weekend sent shock waves across global oil markets, hitting supplies.
The attacks affected half of the Kingdom’s oil exports or about 5 per cent of the global supply and bringing the entire production back on stream could take weeks.
“The strategic reserves are available to us to utilise except for the portion reserved for the Abu Dhabi National Oil Company,” a top official at one of the state-run oil companies said.
“ADNOC has got some right on a part of the strategic reserves, the balance can be utilised by the government oil companies for the government’s requirements,” he said. If that happens, it could be the first time that India has counted on the strategic reserves to tide over a crisis. “The whole thing is emerging now. We have no clarity on what will happen. We are waiting and watching, but the strategic reserves can help to an extent in the short term,” the official said.
State-owned Indian Strategic Petroleum Reserve Ltd (ISPRL), which manages emergency oil reserves in the country, has already built 5.33 million tonnes (mt) of underground storage capacity at Visakhapatnam (1.33 million tonnes), Mangaluru (1.5 million tonnes) and Padur (2.5 million tonnes), which can help meet around 9.5 days of the country’s oil needs. Currently, the strategic reserves are not filled to its full capacity. Typically, India’s oil refiners hold a crude inventory of 15-20 days, including the crude on the high seas en-route to be delivered to customers.
About 16 per cent of India’s crude imports comes from Saudi Arabia, the world’s biggest oil producer. This translates into a volume of 35-40 million tonnes. India is the world’s third largest oil importer. “I personally don’t feel that the attack on the Aramco plant will seriously impact India in the long term. Because, the US has a lot of crude and they are increasing their exports. By December, they are looking to go up to some 5 million barrels per day and Russia also has a lot of crude. These were not imported in big quantities so far because it was not viable, but it will become economical in the absence of Saudi crude. Besides, oil exporters such as Kuwait and Iraq may step up supplies. The Organisation of the Petroleum Exporting Countries (OPEC) may also review the steep output cuts in view of the situation. These are things which we cannot predict, but all these are possibilities,” the official added.
Meanwhile, according to a PTI report, Petroleum Minister Dharmendra Pradhan said on Monday that India will not face any supply disruption after a reduction in production at its No. 2 supplier Saudi Arabia. “Following the attacks on the oil stabilisation centres of @Saudi_Aramco, top executives of Aramco have been contacted,” he tweeted. “We have reviewed our overall crude oil supplies for the month of September with our OMCs. We are confident there would be no supply disruption to India. We are closely monitoring the evolving situation.”