India to release 5 mn oil from reserves to tame pricestext_fields
India has decided to join the global alliance of major oil consuming countries by agreeing to release 5 million barrels of crude oil from its strategic oil reserve to address the supply constraint that has kept crude prices high, a government source said on Tuesday.
In an official statement, the petroleum ministry said that the crude oil release will take place in consultation with countries like the US, Japan, China, Britain and Republic of Korea, which are also major global energy consumers.
This is the first time ever that India, which stores 5.33 million tonnes or about 38 million barrels of crude oil in underground caverns at three locations on the east and west coast, is releasing stocks for such purposes.
Of this, about 5 million barrels will be released, starting as early as 7-10 days, the official, who wished not to be named said.
The stocks will be sold to refineries of Mangalore Refinery and Petrochemicals Ltd. (MRPL) and Hindustan Petroleum Corp Ltd. (HPCL), which are connected by pipeline to the strategic reserves.
"We may look at releasing more reserves later," the official said, adding a formal announcement was expected later in the day.
The decision has come after the US has urged to some of the world's largest oil-consuming nations, including China, India and Japan, to release crude oil from their respective reserves in order to bring down global prices of crude oil.
This after members of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies rebuffed repeated requests to speed up their production increases.
India has been the most forceful about flexing its muscles as a major oil consumer, cutting shipments from Saudi Arabia by about a quarter after OPEC+ extended production cuts.
"We are working on releasing stocks from our strategic reserves in coordination with other nations," the official said. "The release timing will depend on the U.S. making a formal announcement." India is the world's third-largest oil consumer and importing nation and has been severely impacted by the relentless rise in international oil prices.
Just like the U.S., India also believes that high prices are starting to produce unwanted inflation and undermine recovery from the COVID-19 pandemic.
Retail petrol and diesel prices shot up to record levels earlier this month before the government cut taxes, costing it ₹60,000 crore in revenue this year.
India has built 1.33 million tonnes of storage at Visakhapatnam in Andhra Pradesh, 1.5 million tonnes at Mangaluru and 2.5 million tonnes at Padur (both in Karnataka).
The official said the stocks from the reserves will be released in tandem with other countries.