Category: Current Affairs

India plans to set up its first privately managed India's Strategic Petroleum Reserves (SPR) by 2029-30, allowing the operator to trade all stored oil, as the chief executive of Indian Strategic Petroleum Reserve Limited (ISPRL) said. Will get autonomy. The move is in line with the model seen in countries such as Japan and South Korea, where private lessors, primarily oil majors, oversee crude oil trading. India has, previously, allowed only partial commercialization for its existing three SPRs in southern India, which have a total capacity of 36.7 million barrels. India's Strategic Petroleum ReservesExpansion of SPR capacity and commercialization strategyInspiration behind the expansionCost Estimates and Financial StructureExpansion of SPR capacity and commercialization strategyWhat are Strategic Petroleum Reserves and why are they important?Why is India planning to include a private company in its SPR by 2029/30?Frequently Asked Questions about India's Strategic Petroleum Reserves (SPRs):What are Strategic Petroleum Reserves (SPRs) and why are they important?Why is India planning to expand its SPR capacity and include private companies in its management?What is the significance of the proposed SPR projects in Padur, Karnataka, and Odisha? Expansion of SPR capacity and commercialization strategy India intends to build two new SPRs: an 18.3 million barrel facility in Padur, Karnataka and a 29.3 million barrel SPR in Odisha. These projects will involve private partners, who will be able to exchange all stored oil locally. In the event of a supply shortage, the government will have priority access to oil. Inspiration behind the expansion India, the world's third largest oil importer and user, seeks to strengthen its SPR capacity to mitigate risks associated with global supply disruptions and price variations. Additionally, the creation of storage capacity is in line with India's desire to join the International Energy Agency (IEA), which requires member countries to maintain at least 90 days of oil consumption. Cost Estimates and Financial Structure According to ISPRL, the Padur SPR project will come with an anticipated cost of ₹55 billion ($659 million), including pipeline and import facility. The federal government is expected to contribute up to 60% of the total cost. The tender evaluation criteria promote bidders who require the least federal financing or offer the highest premium for a 60-year lease. Expansion of SPR capacity and commercialization strategy India intends to build two new SPRs: an 18.3 million barrel facility in Padur, Karnataka and a 29.3 million barrel SPR in Odisha. These projects will involve private partners, who will be able to exchange all stored oil locally. In the event of a supply shortage, the government will have priority access to oil. What are Strategic Petroleum Reserves and why are they important? Strategic Petroleum Reserves (SPR) are large reserves of crude oil held by countries to ensure a stable supply of petroleum products in the event of supply disruptions or price shocks. The concept of SPR gained prominence after the 1973 oil embargo, which exposed the sensitivity of oil-importing countries to supply disruptions. SPRs play an important role in stabilizing oil markets and ensuring national energy security. By maintaining buffer stocks of crude oil, countries can mitigate the impact of supply disruptions caused by geopolitical events, natural disasters or technological failures. The SPR also provides a strategic tool for countries to respond to price volatility and protect their economies from the adverse effects of oil price increases. Read more: India Gears Up for Electric Future: IOCL and Panasonic Why is India planning to include a private company in its SPR by 2029/30? India currently has three partially commercialized and operational SPR facilities with a total capacity of 5.33 million metric tonnes (MMT) located at Visakhapatnam, Mangalore and Padur. However, to further strengthen its energy security, India plans to expand its SPR capacity. India is planning to create two new Strategic Petroleum Reserve (SPR) facilities: 18.3 million barrel storage cave in Padur, Karnataka 29.3 million barrel facility in Odisha In a unique public-private partnership model, the government will allow private companies to trade 100% of the oil stored in these new SPRs in the domestic market.Through funding and involvement from the business sector, this strategy seeks to increase India's capacity for SPR.There are several reasons for including private businesses in SPR management. First, private participation is expected to bring additional investment, expertise and operational efficiency to the SPR programme.Secondly, it will allow the government to share the financial burden of maintaining and expanding the reserves.Finally, private participation will provide strategic flexibility in terms of SPR utilization and commercialization, enabling India to better respond to market dynamics. Frequently Asked Questions about India's Strategic Petroleum Reserves (SPRs): What are Strategic Petroleum Reserves (SPRs) and why are they important?Strategic Petroleum Reserves are large reserves of crude oil held by countries to ensure a stable supply of petroleum products in the event of supply disruptions or price shocks. They play a crucial role in stabilizing oil markets and ensuring national energy security.Why is India planning to expand its SPR capacity and include private companies in its management?India, as the world's third largest oil importer and user, aims to strengthen its energy security by expanding its SPR capacity. Including private companies in the management allows for additional investment, expertise, and operational efficiency. It also shares the financial burden and provides strategic flexibility in SPR utilization and commercialization.What is the significance of the proposed SPR projects in Padur, Karnataka, and Odisha?These projects will significantly increase India's SPR capacity, enhancing its ability to mitigate risks associated with global supply disruptions and price variations. The Padur project involves an 18.3 million barrel facility, while the Odisha project entails a 29.3 million barrel facility.

Category: Current Affairs

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