India seeks Saudi investment for emergency oil reserves

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New Delhi : The Modi-ruling government is looking forward to getting investment support from Saudi Arabia in terms of building emergency crude reserves that will act as a buffer against volatility in oil prices and supply disruptions for the third-largest oil consumer.

The participation of Saudi Arabia in the country's Strategic Petroleum Reserve program was discussed at the meeting between the kingdom’s Energy Minister Khalid Al-Falih and his Indian counterpart Dharmendra Pradhan in New Delhi. The news has been confirmed by a government source close to the development. The meeting also covered discussion on a proposed $44-billion oil refinery project on India’s west coast with investment from Saudi Arabian National Oil Co.

Saudi Arabia is the main supplier of oil to India. The country exported 36.8 million tons of crude to Indian refiners in the year ended March 2018, accounting for 16.7 percent of their total purchases, according to the statement.

To inform, our country imports four out of every five barrels of oil it consumes. It is now expanding its strategic reserves to shield from perennial political risk in the Middle East and Africa that account for the bulk of its purchases. PM Narendra Modi has paved ways to some of the the underground caverns for commercial storage to lessen the strain on state finances. It has already leased out tanks to Abu Dhabi National Oil Co.

India has already built 5.33 million tons of underground reserves in three locations, which can meet 9.5 days of the country’s oil needs. For now, it has plans to build two new reserves with a combined capacity of 6.5 million tons, sufficient to cover an additional 12 days.