India seeks Saudi investment in strategic oil storage

India is in negotiations with Saudi Arabia for a potential investment in strategic oil storage to ensure oil availability in emergency situations, which may arise out of geopolitical concerns and price volatility.

The expansion of crude reserves under India’s Strategic Petroleum Reserve (SPR) programme will augment emergency cover against potential supply disruptions.

The possibility of Saudi Arabia’s participation in the SPR programme was discussed during a meeting between India’s Petroleum and Natural Gas Minister Dharmendra Pradhan and Saudi Arabia’s Energy, Industry and Mineral Resources Minister Khalid Al-Falih.

India has already built 5.33Mt of emergency storage in underground rock caverns in the states of Karnataka and Andhra Pradesh. The existing capacity will be enough to cater to the country’s oil needs for nine and a half days.

It has offered a portion of the capacity to foreign oil companies, including Adnoc, to store oil. The country holds the right of first refusal to purchase the stockpile in the facilities in the event of an emergency.

The government plans to build two more facilities with a combined capacity of 6.5Mt, which will provide cover for an additional 11.5 days.

The ministers also discussed fast-tracking the implementation of the planned $44bn oil refinery and petrochemical project in Ratnagiri, Maharashtra.

Last year, Saudi Aramco and Adnoc agreed to acquire a 50% interest in the project. Indian state-owned oil companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) hold the remaining 50% stake.

The project was obstructed by regional political party Shiv Sena, which opposed its location. The state government agreed to the demand of shifting the project.