NEW DELHI: India is looking to shave Rs 25,000 crore off its crude import bill by storing cheap oil in ships for future use, allowing the government fiscal headroom for spending on more public welfare measures needed in its fight against the coronavirus pandemic.
“Our oil companies have procured almost seven million tonne oil at low prices. Almost 20% of our demand has been stored. This has also led to reduced import bill which will help us free more resources for more public welfare measures,” oil minister Dharmendra Pradhan said during a social media conversation on the oil market scenario on Monday.
India's total storage capacity, including floating storage currently in use, stands at 38 million tonne, or about 280 million barrels. This is the same as 18%-20% of normal annual demand. Indias daily consumption of oil stood at about 4.5 million barrels a day before the coronavirus pandemic hit economic activities.
After oil began sliding in February, the petroleum ministry inn March sought Rs 3,184 crore, in addition to the Rs 690 crore budgetary support for 2020-21, for buying crude to fill up 2 million tonne capacity left in the 5-million-tonne strategic storage. The plan fitted well with Indias assurance to the G-20 producers, trying to find market balance amid falling consumption and prices, that the worlds third-largest oil consumer will help out with demand.
But the situation soon went for a toss as Indias demand for petroleum products tanked 70% after the countrywide lockdown against Coronavirus began on March 25, forcing refiners to scale back operations and look at deferring contracted cargos as storages filled up. Refiners are now using floating storage — keeping vessels carrying crude anchored at high sea. They are also storing products in ships.
Pradhan called up counterparts from Saudi Arabia and UAE to explain the situation and discussed additional oil purchase. Contracts for over seven million tonRead More – Source
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