(World Oil) – India plans to build larger oil inventories, expand storage capacity and deepen supply partnerships to hedge against the kind of price volatility seen during the Iran war.
“I’m not worried about it, but I have to prepare for it,” Oil Minister Hardeep Singh Puri told reporters in New Delhi on Thursday, replying to a question on whether the world’s third-largest oil consumer was concerned about future spikes.
Crude prices have slumped, wiping out all the gains during the conflict, since flows started to increase through the Strait of Hormuz following an interim U.S.-Iran peace deal. The price retreat may encourage nations to replenish strategic reserves that were used to cushion the initial supply shock caused by the war.
Although India relies heavily on the Middle East for oil, liquefied petroleum gas and liquefied natural gas, New Delhi was able to navigate the turmoil thanks to a diversified supply portfolio and diplomatic ties with producers, Puri said.
The government also shielded citizens from sharp increases in retail fuel prices, a policy that resulted in state-owned refiners collectively incurring losses of 747.81 billion rupees ($7.8 billion) on sales of diesel, gasoline and LPG during the April-June quarter, Puri said.
Prime Minister Narendra Modi will inaugurate a new 180,000-barrel-a-day greenfield refinery in Rajasthan on Saturday, a project expected to further strengthen domestic fuel supplies, Puri said. It will, however, raise India’s oil imports by another 150,000 barrels a day.
Imports will further surge as India’s refining capacity is set to rise about 20% to 6.2 million barrels a day by 2030, reinforcing the country’s ambition to become a major global refining hub.
“The United States hasn’t had a greenfield refinery for the last 50 years and Europe is losing refining capacity,” Puri said. “Global trade in hydrocarbons will be determined and influenced by those countries that have refining capacity.”
