India’s crude reserves in the three strategic caverns are currently around 3.61 million tonnes, which is 67% of the their rated capacity, according to a report by the Lok Sabha’s Standing Committee on petroleum and natural gas.
The Committee highlighted that a cautious approach is required for maintenance of sufficient buffer stock of crude oil to meet any emergent situation given the highly uncertain geopolitical scenario around the world, primarily the major suppliers of crude oil.
The government had allocated Rs 5,000 crore in the budget estimates 2023-24 for filling up crude oil reserves. However, no expenditure on this account was incurred in FY24. For the current financial year 2024-25, the Ministry of Finance has not allocated any amount for filling up of strategic crude reserves as the expenditure on this account was deferred during the previous year. It said that provision on this account will be made during the next financial year 2025-26.
In line with this, the Committee also recommended the Ministry of Petroleum and Natural Gas to maintain the optimum level of Indian Strategic Petroleum Reserves and take up the matter of allocation of adequate budget with the Ministry of Finance.
Indian Strategic Petroleum Reserves was set up with an objective to ensure energy security for the country in the event of oil shocks.
Additionally, under the Budget Estimate 2024-25, the finance ministry has allocated an amount of Rs 408 crore for construction of underground caverns in Phase – II of Indian Strategic Petroleum Reserves which has not started yet, noted the Committee.
“It was informed that even the land for the project has not been acquired so far. In view of the strategic importance of the project, the Committee recommend the Ministry to vigorously pursue the authorities concerned including the respective State Governments, expedite the whole process and ensure full utilization of the budget earmarked for the project in the current financial year so as to accelerate the pace of the work of Phase-II of the project and to ensure that the intended purpose is served,” it said.
Apart from this, the Committee noted that the capital expenditure of the oil ministry and Oil public sector undertakings is not sufficient to meet and manage the surge in demand of petroleum products in the country and achieve net-zero targets and needs to be increased.
“The Committee finds the capital expenditure of the Ministry of Petroleum and Natural Gas and Oil PSUs in the current financial year inadequate to achieve the basic long term goal of energy security. Accordingly, the Committee recommends the Ministry of Petroleum and Natural Gas to endeavor for an increase in the allocation towards capital expenditure in the next possible opportunity,” it said in the report.
In the Budget Estimates of the Ministry of Petroleum and Natural Gas for the current financial year, an amount of Rs 1,128.97 crore has been allocated towards capital expenditure in the as against Rs 35,508.98 crore in BE 2023-24, which is only 3.17% of the BE in 2023-24.