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Why India is storing crude oil in underground caves, and who came up with the idea

Strategic oil reserve: The Narendra Modi government has given in-principal approval for establishing underground crude oil storages in Odisha and Karnataka to increase emergency stockpile cover by 12 days to 22 days.

Why India is storing crude oil in underground caves, and who came up with the idea
The Narendra Modi government has given in-principal approval for establishing underground crude oil storages in Odisha and Karnataka. (Image: ISPRL)

Strategic oil reserve: The Narendra Modi government has given in-principal approval for establishing underground crude oil storages in Odisha and Karnataka to increase emergency stockpile cover by 12 days to 22 days. The storage capacity of these two Strategic Petroleum Reserve (SPR) facilities will be 6.5 Million Metric Tonne (MMT).

India already has underground rock caverns for storage of 5.33MMT of crude oil at three locations: Vishakhapatnam (1.33 MMT), Mangalore (1.5 MMT) and Padur (2.5 MMT).

What it is and why it is being built

Strategic oil reserve is storage facilities for oil in addition to the existing ones of crude oil and petroleum products with the oil companies. The crude oil storages are constructed in underground rock caverns. Rock caverns are large man-made spaces in the rock and are considered the safest means of storing hydrocarbons. Oil reserves are being built to provide the cushion during any external supply disruptions and to ensure India’s energy security. These oil reserves are being managed by Indian Strategic Petroleum Reserves Ltd.

Who came up with the idea

In the 1990s, when the Gulf War hit West Asia, India was pushed to almost bankruptcy. Oil prices shot up and India’s import bill swelled. This led to a foreign exchange crisis that would have financed barely three weeks of import. India managed to avert the crisis by introducing the economic policies: Liberalisation, Privatisation, Globalisation. However, oil volatility was continuing to impact India. To have a long-term solution arising from the oil market, the Atal Bihari Vajpayee government came up with the concept of oil reserves in 1998.

In May this year, India received the first shipload of crude oil from UAE for the Mangalore underground strategic storage. ISPRL had in February signed a contract with ADNOC to lease out part of the Mangalore storage.

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