New Delhi: India has started selling oil from its Strategic Petroleum Reserve (SPR) to state-run oil refiners under a new policy which allows Indian Strategic Petroleum Reserves Ltd (ISPRL) to lease out strategic storage space to Indian and foreign companies, said sources. The government has recently made changes to its policy, paving the way for ISPRL, the authority that manages India's strategic oil reserves, to lease 30 percent of its capacity to Indian and foreign companies.
According to a report by Reuters, Abu Dhabi National Oil Company (ADNOC) has leased one of the two equal size chambers at the 11-million barrel Mangalore SPR. The ISPRL is planning on releasing 8 million barrels from the SPRs to make space. The space will also be leased out to state-run Hindustan Petroleum Corporation Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL), said the report quoting sources.
The two oil marketing companies will buy oil from ISPRL at a discount to the selling price set by producer countries, the report added.
The ISPRL has started to sell 5.5 million barrels of oil from UAE, which is stored in its chamber in Mangalore, to MRPL. The Mangalore SPR is to be emptied by February because MRPL wants to store a different grade of crude oil in it, sources were quoted as saying. While MRPL will lease 300,000 tonnes of space in Mangalore, HPCL will lease a similar sized space in Vizag SPR, which contains Iraqi Basra oil. Sources said that HPCL wants Iraqi oil so ISPRL won't be selling the full volume of oil stored in the SPR. They added that in the next phase, ISPRL will lease out space in its 2.5 million tonne (MT) Padur storage facility, which holds a mix of Arab oil.
The ISPRL filled its SPRs in 2020 with cheap crude when global crude oil prices crashed. In order to lease the storage space out, it will have to empty its chambers to make space for leasing.