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Centre to cash in on slump in global crude prices, build up vast reserves

Amid the Covid-19 threat, the central government has decided to store up 5 million metric tonnes (MMT) of strategic crude oil to ensure energy security in these testing times.

Published: 27th April 2020 02:48 AM  |   Last Updated: 27th April 2020 02:48 AM   |  A+A-

oil, fuel, petrol, diesel, crude, brent

For representational purpose. (Photo | AP)

Express News Service

KOCHI: Amid the Covid-19 threat, the central government has decided to store up 5 million metric tonnes (MMT) of strategic crude oil to ensure energy security in these testing times. The oil will be stored at the Strategic Petroleum Reserves (SPR) storages at Vizag, Mangaluru and Padur near Udupi which will ensure uninterrupted fuel supply across the country.

The oil  from the UAE and Saudi Arabia will reach Mangaluru by this month-end. The move comes amid the unprecedented slump in the prices of global crude. Brent Crude oil, which used to cost $66 per barrel, has dropped to around $20 a barrel. At the present rate of global crude, the country will be saving around `5,000 crore through this tactical move.

The crude oil reserves are estimated to supply approximately 10 days of requirement for the country’s oil refineries, according to the 2017-18 consumption data. SPR storages are managed by Indian Strategic Petroleum Reserves Ltd and are licensed by the Petroleum & Explosives Safety Organisation. According to R Venugopal, Deputy Chief Controller of Explosives, PESO Kerala, underground rock caverns are the safest for storage of petroleum products.

“They can withstand hazards such as terror strikes, war, nuclear bombs, storms, earthquakes, floods, tsunamis, external fires, etc. Apart from being economical, these caverns generate less evaporation loss and are environmentally  more  friendly than above-ground storages. It usually has 20-metre width, and its length depends on storage capacity from 300 to 1,000 metre,” he said. Meanwhile, the prolonged lockdown has greatly reduced the fuel consumption in Kerala. “When the regular supply requires 135 tanker lorries, currently the entire state requirement is managed by a mere 35-40 tankers” said K V Paul, president, Petroleum Products Transporters’ Welfare Association.

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