India is set to import 8 million barrels of Iraqi oil to fill its first strategic petroleum reserve (SPR), taking advantage of cheap prices and lending some support to a market suffering from oversupply.
India’s SPR purchases could temporarily help offset the impact of an expected pause in China’s strategic stocks build and the start of spring maintenance at Asian refiners.
India’s oil ministry on Tuesday instructed state refiners Indian Oil Corp and Hindustan Petroleum Corp Ltd to each seek two very large crude carriers of Basra oil for arrival in May-June, totaling 8 million barrels.
A committee of directors suggested Basra oil as it suits refineries on India’s east coast, the source said, adding this will be a one-off purchase for the SPR as the stocks will be used only in case of supply disruptions.
“On the other hand it would be good news for Iraq, which has been struggling to find buyers because of the deteriorating quality of Basra.
The world’s fourth biggest oil consumer, India last month built its first underground SPR in Andhra Pradesh with a capacity to hold 9.75 million barrels of oil.
A total of three SPRs in the south will hold more than 36 million barrels of oil, enough to cover about 13 days’ supply for India in case of a supply disruption or extreme price volatility.
The two other SPRs, at Padur and Mangalore in southern Karnataka state, will have a capacity of 29.3 million barrels and are expected to be ready by October.
In addition to HPCL’s Vizag refinery, the IOC’s 150,000 bpd Haldia refinery and a 210,000 bpd refinery owned by Chennai Petroleum Corp, a subsidiary of IOC, can process Basra oil.
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