Categories: Business

India to store crude oil in US


crude reserve

new Delhi. India plans to store crude oil in US strategic petroleum reserves. Giving this information, the officials said that this crude oil will not only be used in an emergency, but will also be used for trade if there is any price advantage. India and the United States signed an initial agreement to cooperate on emergency crude oil storage on 17 July. It also includes the possibility of India storing crude oil in the US. A senior government official said, "It is a good concept, but there are many conditions attached to it." First of all India has to pay rent for oil storage in America. This fare will be at the upper level of the international price of crude oil. The official said that another option is to create our own strategic reserves. But it will cost a lot of capital and it will take some years to build. In such a situation, renting for immediate strategic storage would be a better option.

In the US, strategic petroleum reserves (SRPs) are built and maintained by private companies. A country can use the oil stored in the US for its own needs or for trade in terms of profit on the price front. The official said that if the prices come down, then you also have a loss. If the sea route is obstructed, storage in the US will not affect India's energy security, as you cannot take advantage of your reserves, the official said. "It takes a month to get crude from the US." He said that crude oil storage in the US is a kind of hedging to prevent price fluctuations. "All types of hedging have a cost." The official said that the most important is that the purchase of crude oil for storing large quantities has to be paid in advance. In such a situation, companies have to block a lot of capital. India started considering the possibility of storing crude oil in the US a few months ago, but it could not make much progress in this direction due to the huge drop in demand among the Kovid-19. Due to dwindling demand, warehouses and even shipyard stores around the world were completely filled. Although demand has improved now, it is still lower than the pre-Kovid-19 level.

This post was published on July 19, 2020 4:37 pm

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