A recent report has raised concerns about India's preparedness for a potential oil shock, revealing that the country's strategic crude oil reserves can last only 9-10 days. This is significantly lower than the International Energy Agency (IEA) recommendation of 90 days of net imports.
Crude Oil Reserves Insufficient
The report highlights that India, the world's third-largest oil consumer, imports over 85% of its crude oil requirements. Despite having strategic petroleum reserves (SPRs) at three locations—Visakhapatnam, Mangalore, and Padur—with a total capacity of about 5.33 million metric tonnes, the existing stocks cover less than two weeks of demand. The government has plans to expand SPRs, but progress has been slow.
Natural Gas Storage Lacking
Furthermore, the report points out that India imports nearly half of its natural gas requirements as liquefied natural gas (LNG) but lacks dedicated strategic gas storage facilities. This makes the country vulnerable to price volatility and supply disruptions, especially during geopolitical tensions or extreme weather events.
Expert Opinions
Energy experts emphasize the need for India to accelerate the construction of additional storage facilities and diversify import sources. They also suggest boosting domestic production and integrating renewable energy to reduce dependency on fossil fuels.
The findings come at a time when global oil markets are facing uncertainties due to geopolitical conflicts and production cuts by major exporters. India's economy, which is heavily reliant on imported energy, could face inflationary pressures and fiscal strain if oil prices spike suddenly.
In response, the government has stated that it is working on enhancing strategic reserves and exploring options for underground gas storage in depleted fields and salt caverns. However, the timeline for these projects remains unclear.
