India is planning to build five more crude reserves that can hold 12 million metric tons (FT) of oil, ensuring more than one month of supply to the nation in case of disruptions.
Economic Times reported that India may allow private refiners and state firms from West Asia to build five new crude reserves worth Rs200bn (£2.16bn, €2.98bn, $3.2bn). Prime Minister Narendra Modi's government is also considering tax incentives to attract foreign firms into the venture.
India has already completed building one strategic petroleum reserve (SPR), and the first phase of construction of two others nearing completion. The country plans to stock 5 million FT of crude oil in the first phase.
India, which is the world's fourth biggest oil consumer, built its first underground SPR in Andhra Pradesh in February. The reserve has a capacity of 9.75 million barrels (1.33 million FT).
India's oil ministry reportedly instructed state refiners Indian Oil Corp and Hindustan Petroleum Corp to each arrange two very large crude carriers Basra oil shipments, for arrival between May to June. The shipments would total eight million barrels (1.09 million FT).
The government has budgeted Rs24bn for filling the first SPR.
Due to the huge construction costs, the Indian government may seek private partners to invest in the reserves.
"We are exploring the option of private financing," a government official told Economic Times.
The funding may come from national oil companies of energy rich Gulf nations or private refiners in India, who could use the SPR to store their inventory for refining or trade, the official added.
India's move comes amid declining oil prices and fears that reduced US dependence West Africa oil would make oil installations in the region more vulnerable to attacks. The shale boom in the US has dramatically cut down the economic superpower's dependence on the Gulf nations.
The shale boom in the US has dramatically cut down the economic superpower's dependence on the Gulf nations.
India consumes approximately 3,500,000 barrels of oil each day, and depends on imported oil for 80% of its needs.