Facing market instability and the possibility of future price declines, India’s finance ministry has shelved a 50 billion rupee ($602 million) plan to increase the country’s strategic crude oil stocks.
India has little oil storage capacity, with only 39 million barrels of crude — barely enough for eight days’ usage — available in the event of an emergency. It filled the storage in 2020, when Brent crude prices plummeted, but has since released roughly one-third of the oil to local refineries.
The ministry’s decision not to replenish its reserves, which contrasts with other key users, comes as New Delhi wants to reduce its fiscal deficit to 5.9% of GDP in the fiscal year ending March 31, down from 6.4% the previous year. It has instead attempted to lease out space, although refiners have shown little interest thus far.
This might mean that the subsurface storage caverns remain vacant unless market conditions change. Abu Dhabi National Oil Co. has leased one of the Mangalore site’s two 5.5 million barrel caverns. The finance minister has directed ISPRL to negotiate the lease of the second unit with local refiners and Adnoc.