India is seeking to grow its strategic petroleum reserve on the back of the low oil price, which has accelerated the construction and filling of the reserves.
The first phase of its SPR includes three facilities in southern India with a combined capacity of 39.1 million barrels of crude oil. The Visakhapatnam facility began filling last summer while the Mangalore and Padur facilities are due to be completed in last 2016. All three will provide an estimate of 13 days of net oil import coverage.
According to the EIA, India’s government has unveiled plans to add another 91 million barrels of SPR capacity in a second phase by 2020.
It is looking to finance the second phase of its SPR partially through commercial agreements with foreign oil producers who can lease the storage. It is currently negotiating with the UAE’s ADNOC to lease 5.5 million barrels of the Mangalore facility.
Kuwait Petroleum Corporation, Saudi Aramco and Shell have also expressed interest in India’s storage facilities.
Demand for crude and petroleum products is expected to continue to grow, which increases the country’s oil import dependent. In addition to growing consumption, filling the remainder of the country’s first phase of its SPR will further increase demand. It still relies on Middle Eastern countries for more of its crude oil imports.