India looks to save INR250bn by stocking cheap oil

  • India is looking to shave INR250bn 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.
  • India’s storage capacity stands at 38 million tonne, or about 280 million barrels. This is the same as 18%-20% of annual demand. India’s 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 Feb 20, the petroleum ministry sought INR31.84bn in Mar 20 for buying crude to fill up 2 million tonne capacity left in the 5-million-tonne strategic storage.
  • But the situation soon went for a toss as India’s demand for petroleum products tanked 70% after the countrywide lockdown began on 25 Mar 20, forcing refiners to scale back operations and look at deferring contracted cargos as storages filled up.
  • Oil minister Dharmendra Pradhan called up counterparts from Saudi Arabia and UAE to discuss additional oil purchase and contracts for over seven million tonne of crude followed.

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