Govt approves two more new strategic oil reserves of capacity

What is the News?

Under Phase II of the Strategic Petroleum Reserves Program, the Government has approved two additional commercial-cum-strategic facilities at Chandikhol (Odisha) and Padur (TN) under Public-Private Partnership (PPP) model.

What are Strategic Petroleum Reserves(SPR)?

Strategic Petroleum Reserves(SPR) are stockpiles of crude oil maintained by countries to handle the risk of supply disruption from natural disasters, war, or other calamities.

The petroleum reserves are strategic in nature and the crude oil stored in these reserves will be used during an oil shortage event, as and when declared so by the Government.

Who manages Strategic Petroleum Reserves(SPR)?

The construction of the SPR facilities in India is being managed by Indian Strategic Petroleum Reserves Limited (ISPRL). It is a wholly-owned subsidiary of the Oil Industry Development Board (OIDB) under the Ministry of Petroleum & Natural Gas.

Importance of Strategic Petroleum Reserves(SPR) programme:

• The Gulf War in 1990 led to a sharp rise in oil prices and a huge increase in India’s imports.
• Moreover, during the post-1991 Indian economic crisis, foreign exchange reserves could barely finance three weeks’ worth of imports.
• Furthermore, India continued to be affected by volatility in oil prices. Hence, in 1998, the Indian Government proposed the creation of petroleum reserves as a long-term solution for managing the oil market.

Phase I of SPR Programme:

• Under Phase 1, three storage facilities were built in underground locations at Mangalore, Visakhapatnam, and Padur. A total of 5.33 Million Metric Tonnes of storage capacity was created in this phase.

Phase II of SPR Programme:

• Under Phase II, the government has approved two additional storage facilities at Chandikhol (Odisha) and Padur (TN) with a total capacity of 6.5 MMT.