4 April 2024 – India is set to construct its inaugural privately managed strategic petroleum reserve (SPR) by the fiscal year 2029-30. This pioneering endeavor grants the operator full autonomy to trade all stored oil, aligning with the commercial SPR models adopted by nations like Japan and South Korea.
Body: Indian Strategic Petroleum Reserves Ltd (ISPRL) disclosed plans to introduce a fully commercial SPR, a departure from India’s previous partial commercialization approach. The nation currently hosts three SPRs in southern India, collectively accommodating 36.7 million barrels of oil.
The upcoming initiative involves the establishment of two new SPRs, starting with an 18.3 million barrels cavern in Padur, Karnataka, followed by a 29.3 million barrels SPR in Odisha. Private partners will be authorized to engage in local oil trading, with the government retaining priority access in times of shortage.
ISPRL’s CEO, L.R. Jain, outlined the project’s timeline and procurement strategy, including the issuance of tenders to assess interest among domestic and international firms. The Padur SPR is slated for completion within 60 months from initiation, with tender awards expected by September.
India’s endeavor to expand SPR capacity underscores its commitment to mitigating global supply disruptions and price volatility, crucial for the world’s third-largest oil importer and consumer. Furthermore, enhancing storage capabilities aligns with India’s aspiration to meet International Energy Agency (IEA) standards, necessitating a 90-day oil consumption reserve.
ISPRL estimates the Padur SPR project, including associated infrastructure, to cost approximately 55 billion rupees ($659 million), with the government financing up to 60% of the total expenditure. The selection process prioritizes bidders offering optimal federal financing or demonstrating the highest lease premium over 60 years.
