Building reserves is the need of the hour for protecting the country against oil price shocks. Analyse in the context of Ukraine crisis (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· In the case of India, neither has it built enough strategic reserve capacity nor is its domestic production sufficient enough to meet its demand. India is heavily dependent on imports for crude oil and almost 50 per cent of its gas requirement is met through imports.
· India imports crude oil from various geographical regions such as West Asia, Africa, Europe, North America, South America and South-East Asia.
· The import dependency (per cent) of crude oil is based on consumption of petroleum products during the year. For example, during April-December 2021, the import dependence was almost 85 per cent.
· As per the consumption pattern of 2019-20, the total capacity in the established Strategic Petroleum Reserves facilities, with total capacity of 5.33 mt (about 39 million barrels), is estimated to provide for about 9.5 days of crude oil requirement.
· India has repeatedly expressed concern at supply of oil being artificially adjusted below demand levels by oil-producing countries, leading to rising prices and negative attendant consequences.
· What India can do now is to push ahead in building the reserves. It should not wait for Phase II to end before moving to the next phases. Besides, it should also focus on creating gas reserves for which the drying or dried-up wells/fields of ONGC and others can be used.
