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The Silicon Review Asia

India to store its crude oil US strategic petroleum reserves

India to store its crude oil US strategic petroleum reserves

India is setting a new plan to store all its crude oil, and it is all set to stock up its crude oil in US strategic petroleum reserves for not just emergency usage but also trading in order to capture the price advantage. India and the US have officially signed a preliminary agreement, which states that both the nations agree to cooperate on emergency crude oil reserves. India can store its crude oil in the US emergency stockpile.

"It is a good concept, but it comes with a lot of riders. For one, India will have to pay a rental for hiring the storage in the US. This rental will be on top of the international oil price. The alternative is to build our strategic reserves, which will involve huge capital costs and take a few years to construct. So the rental is a small fee to pay to get immediate access to a strategic reserve," a senior government official said.

This agreement comes up with many advantages, as India can stock up all its crude oil in the US until it finds an alternate and the oil stored in the US reserves can be used for trading purposes to get their price advantage. It can also be used for the nation's own purpose. It will also reduce the export-import costs and be easy to ship the oil from the US to other countries.

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