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India Eyes China Oil Reserve Strategy
17 Jun
Summary
- India may mandate refiners to hold significantly larger crude oil reserves.
- This policy aims to protect the nation from future energy supply shocks.
- Refiners could face substantial costs for storage and oil purchases.
India is contemplating a policy inspired by China to significantly increase mandatory crude oil reserves held by domestic refiners. This strategic initiative aims to shield the country from potential future supply disruptions.
The proposed stockpile would supplement the existing operational reserves refiners currently hold. The policy is in its preliminary stages, with critical details yet to be finalized, and no definitive implementation decision has been made.
Refiners anticipate substantial costs, potentially amounting to Rs 60,000 crore for crude purchases alone, to double their inventories. Additional investments for new storage facilities, taking years to construct, would also be necessary.
The government's consideration of this policy comes as recent geopolitical events have highlighted vulnerabilities in global oil supply routes. India's current strategic crude reserves are notably smaller compared to those held by countries like China, the US, and Japan.
