The rout of crude oil to multi-year lows presents India with a great opportunity to fill up its storage and strategic petroleum reserves (SPRs). Storing oil now at low prices will enhance the country’s energy security, given its high import dependency.

The demand destruction due to the Covid-19 crisis outweighs the recent massive output cut agreement by OPEC+, and oil is likely to remain subdued. The world’s onshore storage capacities are running out, and supertanker ships being used to store oil on the seas are also filling up fast.

But it will be foolhardy to think that oil will stay down forever. The expected bankruptcies of many oil producers could shut down a fair amount of supply that may not revive easily.

So, India should move quickly and fill up its storage and reserves before the window of opportunity closes. The government seems aware of the urgency. At the recent meeting of G20 energy ministers, Oil Minister Dharmendra Pradhan said that India will continue to fill up its SPRs.

But is enough being done, and fast? Reports say that until early this month, India’s SPRs were just about half full. The country currently has SPR capacity of 5.33 million tonnes in giant underground caverns in Vishakhapatnam, Mangaluru and Padur — about 9-10 days of the country’s import. Only 56 per cent of this has been filled, while orders have been placed for the rest. When these will be fully filled is unclear.

Meanwhile, the Phase II of the strategic petroleum reserves has been long delayed. In June 2018, the government had approved 6.5 million tonnes’ capacity in Chandikhol and Padur. Nearly two years on, not much has happened. Earlier, in the Phase I construction of the 5.33 million tonnes, there were huge time and cost overruns.

The country’s total crude storage capacity — with oil refiners and SPRs — is about 75 days of oil import. This is short of the global norm of 90 days. India needs to get its act together.

The writer is Deputy Editor with BusinessLine