The Union Cabinet on Wednesday gave approval to Rs 3,874 crore spending on stocking low priced oil in India's three strategic underground crude oil storages.
The Cabinet Committee on Economic Affairs (CCEA) also allowed Abu Dhabi National Oil Co, which has hired a part of the strategic storage, to trade the stocked oil, union Minister Prakash Javadekar told reporters here.
India saved over Rs 5,000 crore when the country in April-May used two-decade low international oil prices to fill up its three strategic underground crude oil storages.
India, the world's third-biggest oil importer, has built strategic storages in underground rock caverns at three places to meet any contingency.
Taking advantage of the low crude oil prices in the international market, India purchased 16.71 million barrels (mbbl) of crude in April-May 2020 and filled all the three Strategic Petroleum Reserves created at Visakhapatnam, Mangaluru and Padur.
The Ministry of Petroleum and Natural Gas spent Rs 3,874 crore on buying such oil and the Cabinet on Wednesday gave a post-facto approval for the same, he said.
Oil prices globally had slumped after the coronavirus pandemic pummelled demand.
The average cost of procurement of crude oil was USD 19 per barrel, as compared to USD 60 a barrel prevailing during January 2020.
This helped save USD 685.11 million or Rs 5,069 crore.
Javadekar said the cabinet also allowed Abu Dhabi National Oil Co (ADNOC) to trade the oil it has stocked at the strategic reserves.
The Indian Strategic Petroleum Reserves Ltd (ISPRL) built the underground storages at Mangaluru and Padur in Karnataka and Visakhapatnam in Andhra Pradesh as insurance against supply and price disruptions.
Mangaluru storage has a total capacity of 1.5 million tonnes. Of this, half had previously been hired by ADNOC to store its crude oil. The remaining half was in April-May.
The arrangement with ADNOC allows India to have a first right over the crude oil stored in the reserves during any emergency, he said.
Padur, the biggest of the three storages, has a total capacity of 2.5 million tonnes (about 17 million barrels). ADNOC had in November 2018 signed up to hire half of this capacity but never actually stored oil in it.
India meets 85 per cent of its oil needs through imports and the three storages meet 9.5 days' requirement.
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