The oil consumption has fallen drastically due to the COVID-19 pandemic. The global lockdown has stopped almost all of the private and public vehicles too. As such, the prices of crude oil have dropped to as low as $20 per barrel.
This is a great opportunity for countries that can store all this crude oil now, and use it later Such a fall in crude oil can never be possible again if the world revives.
India, which imports more than 83% of its total oil needs, could have saved over a billion Dollars, only if it could have had the capacity to store the oil now.
Storage is the most important and most demanded thing right now in the market. The country could have had low-cost inventory and filled its storage, only to see it later.
While India is filling its caverns with crude, the lack of space means it is an opportunity lost.
Some countries have started storing oil over water as the containers over land are already full.
India’s combined strategic oil reserve capacity of 5.33 million mt at three locations in southern Indian – Vishakhapatnam, Mangaluru, and Padur – is just over half full. Even if this is filled up completely, the country will import substitution of just 9 days, which is considered too low.
The country is far behind its neighbors in terms of SPR( Strategic Petroleum Reserve ) capacity. While China’s capacity is 550 million barrels, Japan’s is 528 million barrels, and South Korea’s is 214 million barrels.
While India’s SPR is just 39 million barrels, which is extremely low for a country with so many imports.
However, the Government has approved another 6.5 million SPR. This is due to the county’s reliance on oil. But this will take six to seven years, thus the country cannot benefit further from the current prices.
So the lack of storage in India has caused a huge loss as it is unable to take full advantage of the current situation. But the 3 oil reserves will be filled.