Back in March, the 32-member countries of the International Energy Agency (IEA) agreed to a record release of 400 million barrels of oil and refined products from their emergency reserves after the Iran war disrupted global energy flows and triggered sharp oil price spikes. The United States did the heavy lifting, with the Trump administration authorizing the release of 172 million barrels from the U.S. Strategic Petroleum Reserve (SPR), comparable to the 180 million barrels that the Biden administration released during the energy crisis triggered by the war in Ukraine. Not surprisingly, more countries are now looking to beef up their strategic oil reserves as global energy crises are quickly becoming the norm rather than the exception. To wit, India and South Africa have unveiled plans to aggressively expand their SPRs in a bid to shore up their energy security.
India currently imports over 80% of its oil, and major supply bottlenecks such as the blockade at the Strait of Hormuz can turn into an existential crisis. In response, the country is looking to rapidly expand its oil buffers: India’s state-owned Oil and Natural Gas Corp (ONGC) has announced plans to construct a 1.75 million metric ton (approximately 13 million barrels) Strategic Petroleum Reserve in the southern coastal city of Mangalore.
Related: Eni CEO: Big Oil Bets on Southeast Asia and Latin America
India’s existing national strategic stockpile is managed by Indian Strategic Petroleum Reserves Ltd (ISPRL) across Mangalore, Padur, and Visakhapatnam, all in the south. The combined capacity of these operational reserves stands at just 5.33 million metric tons (~39 million barrels), with this emergency inventory enough to cover only 8 to 9 days of India’s net oil demand.
India’s overall refining capacity currently stands at ~ 5.2 million barrels per day, according to Рейтер. ONGC’s refining subsidiary, Mangalore Refinery and Petrochemicals Limited (MRPL), operates a 300,000 barrel-per-day facility nearby and currently leases half of the existing 1.5 million-ton Mangalore SPR while the remaining half is leased to the United Arab Emirates’ Abu Dhabi National Oil Co (ADNOC).
The ONGC project is only part of a much larger expansion of India’s emergency oil storage network. The central government is also advancing Phase II of its Strategic Petroleum Reserve program, constructing a 4 million metric ton underground cavern at Chandikhol in Odisha and a 2.5 million metric ton facility at Padur in Karnataka. The two projects will add 6.5 million metric tons (47.6 million barrels) of emergency crude storage, more than doubling the government’s strategic reserves.
The expanded SPR will complement the 64 days of oil inventories already held by India’s domestic refining industry. For some context, under the IEA’s International Energy Program (IEP), member countries are obligated to hold emergency oil stocks equivalent to at least 90 days of the previous calendar year’s average daily net imports, according to Reuters.
(For some context, under the IEA’s International Energy Program (IEP), member countries are obligated to hold emergency oil stocks equivalent to at least 90 days of the previous calendar year’s average daily net imports.)
Similarly, South Africa’s Department of Mineral Resources and Energy (DMRE) recently published a draft policy to heavily scale up its strategic oil reserves to cushion against global energy emergencies.
South Africa finds itself in a precarious position, having closed roughly half of its domestic refining capacity in recent years in large part due to aging infrastructure, major accidents and the high cost of upgrading to cleaner fuel specifications. The country is now almost wholly reliant on imported gasoline, diesel and jet fuel.
Official reports from March estimated the country’s crude reserves at only 8 million barrels, partially due to a highly controversial and illegal state sell-off of 10 million barrels in 2015. The government estimates that if South Africa were to suffer a complete interruption in fuel supplies, the economy would lose about 1 billion rand ($61 million) each day.
South Africa’s proposal divides responsibility for emergency fuel stocks between the government and the private sector.
Under the plan, the state-owned South African National Petroleum Company (SANPC) would build and maintain strategic reserves equal to 60 days of national demand or net imports, eventually increasing that target to 90 days. The reserve would consist of roughly 70% crude oil and 30% refined fuels, totaling about 36 million barrels.
Separately, licensed fuel distributors, manufacturers and importers would be required to maintain an additional 14 to 21 days of commercial fuel inventories at their own expense. Those private inventories would absorb short-term supply disruptions, allowing the government to preserve its strategic reserves for major emergencies.
Алекс Кимани, Oilprice.com
Другие лучшие статьи с сайта Oilprice.com
- India Hikes Diesel and Jet Fuel Export Tax
- Brent Futures Flip to Backwardation as Middle East Supply Risks Return
- U.S. Gasoline Prices Could Hit $4 Per Gallon Within Days