India's oil stock levels comfortable to meet any geopolitical turbulence: SPR chief

India's overall oil stock levels are comfortable as refiners are holding adequate stocks to supplement volumes in strategic reserves, which together can help to keep domestic markets well supplied during geopolitical turbulence, the chief executive officer of Indian Strategic Petroleum Reserves Ltd. and refining sources said May 7.

The comments from LR Jain, CEO of ISPRL, made exclusively to Platts came immediately after India said it had launched military operations aimed at "terrorist infrastructure" in Pakistan and Pakistan-occupied Jammu and Kashmir following an attack on tourists last month in India-administered Kashmir. Pakistan has said it would respond to the military operations.

"Oil markets in India are very well supplied. If you look at the combined availability of what's available with refiners and our total SPR capacity, it's enough to keep availability at comfortable levels even in the event of any escalation," Jain told Platts, part of S&P Global Commodity Insights.

Sources at some state refiners also added that India was holding enough oil inventories to meet any kind of supply disruption.

"Escalating tensions between the two countries could lead to increased oil demand in the near term, as armed forces ramp up usage and countries potentially build oil inventories for security purposes," said Himi Srivastava, principal research analyst for Asian oil markets at Platts.

India's SPRs currently provide reserves of about 9.5 days of net oil imports. State-run oil companies hold storage facilities for crude oil and petroleum products for 64.5 days of total net imports, bringing the current total national storage capacity of crude and petroleum products to 74 days of total net imports.

On the other hand, IEA member countries are required to ensure oil stock levels equivalent to no fewer than 90 days of their net imports.

"Even though we are a bit short of the IEA's prescribed limit, we are stepping up efforts to expand our capacity. We are not only looking at expanding our caverns in India but also aiming at countries like Oman to hold SPRs overseas," Jain added.

In its first phase, India set up SPRs at three locations with a combined capacity of 5.33 million mt -- 1.33 million mt at Visakhapatnam, 1.5 million mt at Mangalore and 2.5 million mt at Padur in Karnataka.

In the second phase, India is looking to augment storage capacity by creating an additional 6.5 million mt of SPRs at two locations -- 4 million mt at Chandikhol in the eastern state of Odisha and another 2.5 million mt at Padur. They will be set up on a public-private partnership model -- called design, build, finance, operate and transfer.

ISPRL has invited bids from foreign and domestic companies for the second phase of the project at Padur. The Indian government would consider providing subsidies of up to 60% of the construction cost of the project, Jain said.

Policy flexibility

"The Indian government has provided policy flexibility on how the oil in SPRs should be used during normal times, but the final word on usage lies with the government during difficult times," Jain said.

The Indian government has undertaken a series of policy reforms under which 50% of the oil in SPRs would be kept for strategic use, while 30% of the capacity has been permitted to be rented out. The remaining 20% would be used for trading.

The decision to allocate cavern space for renting and using part of the volume for trading would give ISPRL flexibility to sell crude to domestic refiners while importing and refilling reserves when international prices are low. The government would still retain the first right to use the entire volume of the caverns in case of an emergency, Jain said.

Abu Dhabi National Oil Co. is currently the only overseas company that stores oil in India's caverns. It holds about 5.86 million barrels at the Mangalore facility.

During the COVID-19 pandemic, ADNOC urged the Indian government to allow it to export some volumes from the caverns. As a result, India's petroleum ministry gave permission to ADNOC, which is now the only overseas producer with oil stored in the caverns in India for re-export to other countries.

"It is too early to make any decision, but if the situation deteriorates, the government holds the right and may deny any permission to export from the caverns, which has always been a part of the original agreement," a petroleum ministry official said.

Crude diversification

"India's crude diversification strategy is also going to come in handy during any period of turbulence. They are not only dependent on one region, like the Middle East, for the bulk of the supplies. India is also buying huge amounts of oil from both the US and Russia, which can help to act as a cushion," Jain said.

Indian imports of US crude averaged 247,000 b/d in January-April of this year, nearly 100% higher than 124,000 b/d over the same four-month period in 2024, according to data from S&P Global Commodities at Sea.

In 2024, India witnessed a shift in its crude oil sourcing pattern. Imports from the Middle East took a bit of a hit, while Russian crude stepped up, making up around 35% of the total imports, which reached about 4.9 million b/d. Although India continued to receive smaller volumes from regions such as Latin America and Africa, the Middle East and Russia combined accounted for nearly 80% of India's crude imports.