West Asian companies likely to build five crude reserves in India:
- The government may rope in private refiners and state firms from West Asia to build five new crude reserves worth Rs 20,000 crore and is also considering tax incentives to attract foreign firms to build and use the assets.
- India’s plan to build three reserves in the first phase is nearing completion with one having finished construction and waiting for the fill and the other two slated to be ready towards the end of the year.
- In the second phase, the government plans to build five reserves, with a combined capacity to hold 12 MMT of crude oil, higher than 5 MMT in the first phase, which could act as a buffer for more than a month in case supplies to the country are disrupted.
- Indian Oil Corporation and Hindustan Petroleum Corporation will purchase 1 million metric tonne (MMT) of crude supplies together to fill up the first reserve over the next three months, timing purchases in a way to prevent price spike.
- The government has budgeted Rs 2,400 crore for filling the first reserve.
Reasons to guard against potential energy supply disruption:
- Declining dependency of US on oil supplies from west Asia may make oil installations in the region more vulnerable to attacks.
- Collapsing oil prices.