In a big blow to the Aatmanirbhar Bharat Abhiyan, India is planning to store its Oil in US Reserves. Although the move will create further energy-dependency for India in the event of supply-chain disruption or price-spikes, the policy is being projected as a strategic masterstroke by the Oil Minister.
- In a big blow to the Aatmanirbhar Bharat Abhiyan, India is planning to store its Oil in US Reserves
- Although the move will create further energy-dependency for India in the event of supply-chain disruption or price-spikes, the policy is being projected as a strategic masterstroke by the Oil Minister
- India actually began importing crude oil from the US in 2017
- It is projected by the Oil Ministry that this was mainly to diversify India’s import basket
- The actual reason however, is the American ultimatum to bring down import of Iranian oil to zero
- India has always been looking to expand the storage capacity
- But instead of building storage infrastructure and protecting our strategic reserves within India, the Oil Ministry is hiring storage in the US
- These reserved stocks if within India can be used in times of extreme price volatility or supply disruption
- The same becomes a tool of geopolitical influence if located at any foreign location
Strategic Masterstroke or Energy Dependency
India is taking a strategic advance step to store its crude oil in US strategic petroleum reserves. This is to serve as an insurance against any supply disruption or price spikes, oil minister Dharmendra Pradhan said on Friday.
He said the two nations have signed a memorandum of understanding (MoU) signifying that the two countries are being cooperative on strategic petroleum reserves.
“We are also in an advanced stage of discussions for storing crude oil US strategic petroleum reserves to increase India’s strategic oil stockpile,” he told reporters after co-chairing the second India-US Strategic Energy Partnership Ministerial with US Secretary of Energy Dan Brouillette.
Why not build storage capacity within India?
The US has the strategic petroleum reserve (SPR) with a storage capacity of 714 million barrels of oil. It is the world’s largest supply of emergency crude oil.
In comparison to the SPR, India stores 5.33 million tonnes (about 38 million barrels) of crude oil in underground storages at three locations on the east and west coast. This is hardly enough to meet its 9.5 days needs.
According to the International Energy Agency (IEA) its members should have at least 90 days of stock in the strategic reserves.
India has always been looking to expand the storage capacity. But instead of building storage infrastructure and protecting our strategic reserves within India, the Oil Ministry is hiring storage in the US and projecting it as a feasible option for India. These reserved stocks if within India can be used in times of extreme price volatility or supply disruption. The same becomes a tool of geopolitical influence if located at any foreign location.
US Energy Deputy Secretary Dan Brouillette – The Swamp Creature
An obviously glad US Secretary of Energy Dan Brouillette said on the development:
“We are beginning to collaborate on strategic petroleum reserves as well and that is an important element of energy security. We are collaborating on renewable energy, nuclear energy, energy efficiency in buildings, appliances, and industrial sector.”
Dan Brouillette is known as the Creature of the Swamp, which the American President Donald Trump promised to drain in his “Drain the Swamp” campaign. He served as the chief of staff to the House of Representatives Committee on Energy and Commerce from 2003 to 2004. He also served as an assistant secretary of energy for congressional and intergovernmental affairs under President George W. Bush.
India’s Energy Dependence
US oil supplies to India have leaped from ten-fold to 2,50,000 barrels per day (bpd) between 2017 and 2019. As of now, the US is India’s sixth-largest oil supplier. As an estimate India bought 1.9 million tonnes (38,000 bpd) of crude oil from the US in 2017-18 and another 6.2 million tonnes (1,24,000 bpd) in 2018-19.
The volume that Brouillette talked amounts to 12.5 million tonnes of oil imports in a year. India, is 85 percent dependent on imports to completely meet its oil needs. It bought 101.4 million tonnes of crude oil from overseas in between April 2019 to March 2020.
India actually began importing crude oil from the US in 2017. Although it is projected by the Oil Ministry that this was mainly to diversify India’s import basket, the actual reason is the American ultimatum to bring down import of Iranian oil to zero. Indian ministers seem to be blindly falling victim to the Persian Gulf Tanker Wars with no independent policy of its own to protect Indian interests.
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