Expansion of Strategic Petroleum Reserves: Energy Security, Infrastructure Challenges, & Funding Constraints

Context:

23rd Standing Committee Report of the petroleum ministry recommends options to expand strategic petroleum reserves (SPRs) in the country.

Key Recommendations for Strategic Petroleum Reserves: Overground Storage, Reducing Crude Oil Dependency, and Funding Imperatives 

• Overground Storage: Existing and recently commissioned refineries should set up strategic storage capacity by  building five or six small, ground-level storage tanks with smaller capacities like 2 to 3 days at 5 to 6 locations which can bring up 15 to 20 days additional capacity.
• Assess the Dependence on Crude oil:  To increase the capacity for SPRs with an eye on demand in 2040 with the  International Energy Agency anticipating India’s crude oil demand to reach 8.7 million barrels a day by 2040, with an import dependency of over 90 per cent.
• The committee asked the ministry to provide adequate  funds for creating storage caverns.
• It also asked state-run petroleum companies to store and maintain the caverns for their usage.

Strategic Petroleum Reserves (SPRs): Safeguarding Energy Security through ISPRL

• Present capacity: India’s existing strategic storage is of 5.33 million tonnes (39 million barrels) meeting  approximately 9.5 days of national demand.
• Objective: To ensure the country’s energy security, by building a strategic reserve of oil that can be used in case of emergency situations.
• Implementing Agency: Indian Strategic Petroleum Reserve Limited (ISPRL) It  is a wholly owned subsidiary (WOS) of the Oil Industry Development Board (OIDB), which is a Body Corporate.

Limitations in Strategic Petroleum Reserves: Infrastructure, Space, and Funding Concerns

• Lack of adequate infrastructure:  A strategic storage facility needs  to have adequate infrastructure in the form of ships, ports, and pipeline connectivity  to other plants across India.
• Lack of space: Because of the  limited space at existing facilities, each of the proposed storage tanks may hold only around 30,000 tonnes of crude oil, and  20 such tanks across India will hold around 600,000 tonnes, fulfilling just  a day’s demand.
• Funds: The allocation for building the  Phase II of SPRs is meagre with only Rs 510 crore allocated,  a fraction of the cost of Phase I’s cost around Rs 4,100 crore.
• Easily  accessible: The SPR should be easily accessible  to any refinery in the country to enable smooth and continuous production of petroleum. 

News source: Business Standard