From UPSC perspective, the following things are important :
Prelims level : Strategic Reserves
Mains level : Coal crisis in India
The Centre has stressed the need to build strategic reserves of imported coal and gas as was being done for petroleum products.
Why need strategic reserves for Coal and Gas?
- Many countries have started keeping strategic reserves, because when it comes to a crunch, every country will meet its needs first.
- Russia has curtailed gas supply to Europe because they want more gas to be consumed within their country.
- There is a surge in power demand combined with a fall in imports due to high global coal prices have led to supply disruptions.
Do you know?
In 1998, the AB Vajpayee administration proposed building petroleum reserves as a long-term solution to managing the oil market.
What are Strategic Reserves?
- Indian refiners maintain 64.5 days of crude storage, so India has overall reserve oil storage of 74 days
- Indian Strategic Petroleum Reserves Limited (ISPRL) is an Indian company responsible for maintaining the country’s strategic petroleum reserves.
- ISPRL is a wholly-owned subsidiary of the Oil Industry Development Board (OIDB), which functions under the administrative control of the Ministry of Petroleum and Natural Gas.
- It maintains an emergency fuel store of total 5.870 million cubic meters of strategic crude oil enough to provide 9.5 days of consumption.
SPRs in India
|1||Visakhapatnam, Andhra Pradesh||1.33 million tonnes|
|2||Mangalore, Karnataka||1.5 million tonnes|
|3||Padur, Karnataka||2.5 million tonnes and an additional 2.5 million tonnes under construction|
|4||Chandikhol, Odisha||4 million tonnes (under construction)|
Why were SPRs created?
- Gulf War, 1990: It caused a sharp rise in oil prices and a massive increase to India’s imports.
- Forex fluctuations: During the subsequent 1991 Indian economic crisis, foreign exchange reserves could barely finance three weeks’ worth of imports while the government came close to defaulting on its financial obligations.
- Price volatility: India was able to resolve the crisis through policies that liberalized the economy. However, India continued to be impacted by the volatility of oil prices.
How are they constructed?
- The crude oil storages are constructed in underground rock caverns and are located on the East and West coasts of India.
- Crude oil from these caverns can be supplied to the Indian Refineries either through pipelines or through a combination of pipelines and coastal movement.
- Underground rock caverns are considered the safest means of storing hydrocarbons.
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