The Strategic Petroleum Buffer: India’s Prudent Approach Amidst Middle East Tensions
By News 24 Media
New Delhi, April 14, 2024 – The recent escalation of tensions in the Middle East has sent shockwaves through global oil markets. As missile and drone attacks disrupt cargo ships crossing the Red Sea, the world braces for potential supply disruptions. Amidst this turmoil, India’s strategic oil buffer becomes a critical lifeline for the nation’s energy security.
The Middle East Conflict: A Precarious Situation
The ongoing conflict in the Middle East, particularly the war between Israel and Gaza, has raised concerns about oil supply stability. Houthi rebels, aligned with Iran, have targeted ships in the Red Sea, attempting to force humanitarian aid into Gaza. The United States and the United Kingdom have responded with military actions, further escalating tensions.
India’s Strategic Petroleum Reserves (SPRs)
India’s foresight in establishing Strategic Petroleum Reserves (SPRs) has been commendable. These underground storage facilities ensure a stable supply of crude oil even during geopolitical uncertainties or supply disruptions. As per the International Energy Programme agreement, India maintains emergency reserves equivalent to at least 90 days’ worth of net oil imports.
Current SPR Infrastructure:
- Visakhapatnam, Andhra Pradesh: With a capacity of 1.33 million metric tonnes (MMT).
- Mangaluru, Karnataka: Capacity of 1.5 MMT.
- Padur, Karnataka: Largest facility with a capacity of 2.5 MMT.
Recent Tactical Move:
India capitalized on low crude Petroleum oil prices in 2020, filling its existing SPR facilities. This strategic move resulted in substantial notional savings, estimated at around INR 5000 crore.
Expansion Plans:
India is set to add two additional commercial-cum-strategic SPR facilities:
- Chandikhol, Odisha: Capacity of 4 MMT.
- Padur, Karnataka (Expansion): Additional 2.5 MMT.
India’s Growing Oil/Petroleum Demand:
India is poised to become the largest source of global oil demand growth by 2030. Urbanization, industrialization, and a wealthier middle class drive this expansion. Diesel/Gasoil remains the primary source of demand growth, while jet-kerosene and LPG also play significant roles. India’s government aims to reduce oil imports, transition to cleaner fuels, and improve energy security.
Balancing Act:
India’s challenge lies in balancing its growing oil/petroleum demand with prudent management. While the country’s SPRs act as a safety net, diversification of energy sources, exploration, and investment in clean energy are equally crucial. The recent energy crisis underscores the need for a comprehensive approach.
Conclusion:
India’s strategic oil buffer remains a beacon of stability amidst global uncertainties. As geopolitical tensions persist, India’s commitment to energy security and prudent crisis management will be pivotal. The nation’s resolve to bail out of any crisis is a testament to its strategic foresight and resilience.
Disclaimer: The views expressed in this article are solely those of the author and do not represent any official stance.
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