Global push to cap oil prices: India to release 5 mn barrels from reserves

• India is set to release 5 million barrels of crude oil from its strategic reserves as part of a coordinated move along with the US, China, Japan and South Korea aimed at lowering international prices.
• The US will release 50 million barrels of crude oil from its reserves as part of the effort.
• The move is being seen as a strategic step to rein in spiralling global crude oil prices and to keep them under check.
• In response, the OPEC+ group of oil exporting countries, which accounts for about 50 per cent of global crude supply, has indicated that it may reconsider plans to restore production over the coming months.

About the SPR program:

• The Strategic Petroleum Reserve is a huge stock of crude oil used to deal with any crude oil-related crises, such as the risk of supply interruption caused by natural disasters, wars or other disasters.
• Oil reserves are of strategic significance, and the crude oil stored in these reserves will be used during the oil shortages announced by the Indian government.
• The construction of the strategic crude oil storage facility is managed by the Indian Strategic Petroleum Reserve Limited (ISPRL), a special-purpose company that is a wholly-owned subsidiary of the Petroleum Industry Development Board (OIDB) under the Ministry of Petroleum and Natural Gas.

Phase 1 and phase 2:

• Under Phase I of strategic petroleum reserves (SPR) programme, Government of India, through its Special Purpose Vehicle, Indian Strategic Petroleum Reserve Limited (ISPRL), has established petroleum storage facilities with total capacity of 5.33 Million Metric Tonnes (MMT) at 3 locations, namely (i) Vishakhapatnam (ii) Mangaluru and (iii) Padur.
• Under Phase II of the petroleum reserve program, the Government has approved two additional commercial-cum-strategic facilities at Chandikhol (Odisha) and Padur (TN) on Public-Private Partnership (PPP) model.

History for strategic oil reserves:

• In 1990, as the Gulf war engulfed West Asia, India was in the throes of a major energy crisis.
• By all accounts India’s oil reserves at the time were adequate for only three days. While India managed to avert the crisis then, the threat of energy disruption continues to present a real danger even today.
• To address energy insecurity, the Atal Bihari Vajpayee government mooted the concept of strategic petroleum reserves in 1998. Today, with Indian Consumption increasing, the case for creating such reserves grows stronger.