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Strategic Petroleum Reserve (SPR) facility

Topics Covered:

  1. Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
  2. Infrastructure- energy.

 

Strategic Petroleum Reserve (SPR) facility

 

What to study?

  • For Prelims: ISPRL, Strategic petroleum reserves.
  • For Mains: Significance of these reserves, need and potential.

 

Context: In a boost to energy security of the country, PM recently dedicated to the nation, 1.33 MMT Visakhapatnam Strategic Petroleum Reserve (SPR) facility of Indian Strategic Petroleum Reserve Limited (ISPRL). The cost of the Project is Rs. 1125 crore. The Facility has the largest underground storage compartment in the country.

 

About SPR programme:

To ensure energy security, the Government of India had decided to set up 5 million metric tons (MMT) of strategic crude oil storages at three locations namely, Visakhapatnam, Mangalore and Padur (near Udupi). These strategic storages would be in addition to the existing storages of crude oil and petroleum products with the oil companies and would serve as a cushion during any external supply disruptions.

In the 2017-18 budget, it was announced that two more such caverns will be set up Chandikhole in Jajpur district of Odisha and Bikaner in Rajasthan as part of the second phase.

The construction of the Strategic Crude Oil Storage facilities is being managed by Indian Strategic Petroleum Reserves Limited (ISPRL), a Special Purpose Vehicle, which is a wholly owned subsidiary of Oil Industry Development Board (OIDB) under the Ministry of Petroleum & Natural Gas.

 

Need for strategic oil reserves:

  1. In 1990, as the Gulf war engulfed West Asia, India was in the throes of a major energy crisis. By all accounts India’s oil reserves at the time were adequate for only three days. While India managed to avert the crisis then, the threat of energy disruption continues to present a real danger even today.
  2. It is unlikely that India’s energy needs will dramatically move away from fossil fuels in the near future. Over 80% of these fuels come from imports, a majority of which is sourced from West Asia. This is a major strategic risk and poses a massive financial drain for an embattled economy and its growing current account deficit.
  3. To address energy insecurity, the Atal Bihari Vajpayee government mooted the concept of strategic petroleum reserves in 1998. Today, with India consuming upwards of four million barrels of crude every day (January 2015 figures), the case for creating such reserves grows stronger.

 

Mains Question: To address energy insecurity, the government of India had mooted the concept of strategic petroleum reserves in 1998. At present the demand for the same is growing stronger with each passing day. Discuss why such reserve is needed.