(EnergyAsia, January 14 2015, Wednesday) — India should take advantage of the collapse in global oil prices by expanding its storage capacity and securing deals to stockpile crude for producing countries, said local industry officials.

Unlike China, India has been slow in building up its strategic petroleum reserves, with just one terminal in Andhra Pradesh state and two in Karnataka. Plans for another four bases are still on the drawing board at Bikaner in Rajasthan, Rajkot in Gujarat, Padur in Karnataka and Chandikholein Odisha.

Industry association Assocham said the government and the country’s oil companies should speed up as well as expand their stockpiling programme with Brent crude prices now trading at less than half its peak of US$115 a barrel last June.

“It is once in several decade opportunity for India to scale up its strategic oil reserves at much higher level than even three months’ consumption, which itself is a long way to go for us at this point of time,” said Assocham.

In a research paper, Assocham said India’s crude oil import bill fell by US$3 billion in November 2014 as compared to May.

Given the long lead time needed to expand oil stockpiles, it urged the Indian government and oil refining companies to “aggressively” explore opportunities to plan and develop new storage facilities.

“To take advantage of the situation, we need to build physical infrastructure which…would take at least a few months even if the brick is laid today. Who knows by the time our storage capacity for the reserves is ready the crude would not have bounced back.”

The government said it has begun talks with its Middle Eastern counterparts to store crude oil for state-owned Saudi Aramco, Kuwait Petroleum Corporation (KPC) and Abu Dhabi National Oil Company (ADNOC).

Indian and Saudi officials discussed the proposal at the G20 meeting in Australia’s Brisbane last November. While India wants to raise its stockpile level to meet 90 days of consumption, Saudi Arabia is looking for additional outlets for its crude oil to hedge against falling prices.

Saudi Arabia’s deputy premier, Crown Prince Salman bin Abdulaziz Al Saud, discussed with Indian Prime Minister Narendra Modi the possibility of investing in oil storage projects in the Asian country, according to Saudi Press Agency.

Their talks built on an earlier meeting between Oil Minister Dharmendra Pradhan and his Saudi counterpart, Ali al-Naimi, on energy cooperation as the Middle Eastern state supplies about 20% of India’s oil imports.

Saudi Aramco has a long-term agreement to store crude oil in Japan for free in return for guarantee of supply for the host nation during emergencies.

KPC and ADNOC are also in talks with the Indian Strategic Petroleum Reserves Ltd (ISPRL) to stockpile as much as two million barrels of crude oil when India starts up its storage bases.

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