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NEW DELHI: India is trying to save Rs 25bn on its crude oil import bill by storing cheap oil in ships for future use, allowing the government to have fiscal leeway to spend on more welfare measures needed in their fight against the coronavirus pandemic.
“Our oil companies have purchased almost seven million tons of oil at low prices. Almost 20% of our demand has been stored. This has also led to a reduction in the import bill, which will help us free up more resources for more public welfare measures, “Oil Minister Dharmendra Pradhan said during a conversation on social media about the oil market scenario on Monday.
India’s total storage capacity, including floating storage currently in use, is 38 million tons, or about 280 million barrels. This is equivalent to 18% -20% of normal annual demand. India’s daily oil consumption was approximately 4.5 million barrels per day before the coronavirus pandemic affected economic activities.
After oil started to slide in February, the March Oil Ministry inn sought Rs 3.184 billion, in addition to budgetary support of Rs 690 million for 2020-21, for the purchase of crude oil to fill the capacity of 2 million tons remaining in the 5 million ton strategy. storage. The plan was well in line with India’s guarantee to G20 producers as it sought to strike a balance in the market amid falling consumption and prices that the world’s third-largest consumer of oil would help with the demand.
But the situation soon changed as India’s demand for petroleum products plummeted 70% after the nationwide blockade against Coronavirus began on March 25, forcing refiners to curtail operations. and consider deferring the contracted loads as the tanks were filled. Refineries are now using “floating storage”, maintaining vessels that transport oil anchored offshore. They also store products on ships.
Pradhan called his counterparts in Saudi Arabia and the United Arab Emirates to explain the situation and discussed the additional purchase of oil. Contracts for more than seven million tons of crude oil followed those discussions, a move that saved the widespread postponement of shipments by state refineries and strains on ties to two OPEC heavyweights.
Hired at just over $ 21 a barrel, the government is seeking savings of more than Rs 5 crore against the January price of around $ 65 a barrel. In addition, state refineries have also purchased more than 8 million tons at prices from March to April. Against the January share prices, the government estimates a saving of more than Rs 20,000 crore from this purchase against Janaury’s prices.
Refineries also have another 25 million tons of crude oil, as well as refined products in their regularly purchased warehouses, while crude costs $ 33.36 per barrel in March and $ 19.9 in April.
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“Our oil companies have purchased almost seven million tons of oil at low prices. Almost 20% of our demand has been stored. This has also led to a reduction in the import bill, which will help us free up more resources for more public welfare measures, “Oil Minister Dharmendra Pradhan said during a conversation on social media about the oil market scenario on Monday.
India’s total storage capacity, including floating storage currently in use, is 38 million tons, or about 280 million barrels. This is equivalent to 18% -20% of normal annual demand. India’s daily oil consumption was approximately 4.5 million barrels per day before the coronavirus pandemic affected economic activities.
After oil started to slide in February, the March Oil Ministry inn sought Rs 3.184 billion, in addition to budgetary support of Rs 690 million for 2020-21, for the purchase of crude oil to fill the capacity of 2 million tons remaining in the 5 million ton strategy. storage. The plan was well in line with India’s guarantee to G20 producers as it sought to strike a balance in the market amid falling consumption and prices that the world’s third-largest consumer of oil would help with the demand.
But the situation soon changed as India’s demand for petroleum products plummeted 70% after the nationwide blockade against Coronavirus began on March 25, forcing refiners to curtail operations. and consider deferring the contracted loads as the tanks were filled. Refineries are now using “floating storage”, maintaining vessels that transport oil anchored offshore. They also store products on ships.
Pradhan called his counterparts in Saudi Arabia and the United Arab Emirates to explain the situation and discussed the additional purchase of oil. Contracts for more than seven million tons of crude oil followed those discussions, a move that saved the widespread postponement of shipments by state refineries and strains on ties to two OPEC heavyweights.
Hired at just over $ 21 a barrel, the government is seeking savings of more than Rs 5 crore against the January price of around $ 65 a barrel. In addition, state refineries have also purchased more than 8 million tons at prices from March to April. Against the January share prices, the government estimates a saving of more than Rs 20,000 crore from this purchase against Janaury’s prices.
Refineries also have another 25 million tons of crude oil, as well as refined products in their regularly purchased warehouses, while crude costs $ 33.36 per barrel in March and $ 19.9 in April.
