New Delhi: The Indian government is expected to rope in private refiners and state firms from West Asia to build five new mega crude oil reserves worth INR200bn ($3.2bn), and is also considering tax incentives to attract foreign firms to build and use the assets.
India’s plan to build three reserves in the first phase is nearing completion, with one having finished construction and waiting for a fill, and the other two slated to be ready towards the end of the year, the Economic Times reported.
State-run refiners Indian Oil Corporation and Hindustan Petroleum Corporation will purchase 1m tonnes of crude supplies together to fill up the first reserve over the next three months, timing purchases in a way to prevent price spike. The government has budgeted INR24bn for filling the first reserve.
In the second phase, the government plans to build another two reserves, with the five having a combined capacity 12m tonnes of crude oil, which could act as a buffer for more than a month in case supplies to the country were disrupted.
This plan gains significance, given India’s dependence on imports for nearly 80% of its oil requirements, mainly from the Gulf region, where dropping US interest, due to a shale gas boom over the past few years, could make supplies from the region more vulnerable.