India is seeking investment from Saudi Arabia to build emergency crude reserves that will act as a buffer against volatility in oil prices and supply disruptions for the third-largest oil consumer.
Saudi’s participation in the Indian Strategic Petroleum Reserve program was discussed at a meeting between the kingdom’s Energy Minister Khalid Al-Falih and his Indian counterpart Dharmendra Pradhan in New Delhi on Saturday, according to a government statement on Sunday. They also discussed expediting a proposed $44-billion oil refinery project on India’s west coast with investment from Saudi Arabian National Oil Co., it said.
India, which imports four out of every five barrels of oil it consumes, is expanding its strategic reserves to shield from perennial political risk in the Middle East and Africa that account for the bulk of its purchases. Prime Minister Narendra Modi has opened some of the underground caverns for commercial storage to lessen the strain on state finances. It has already leased out tanks to Abu Dhabi National Oil Co.
India has already built 5.33 million tons of underground reserves in three locations, which can meet 9.5 days of the country’s oil needs. It now plans two new reserves with a combined capacity of 6.5 million tons, sufficient to cover an additional 12 days.
Saudi Arabia is a key oil supplier to India and exported 36.8 million tons of crude to Indian refiners in the year ended March 2018, accounting for 16.7 per cent of their total purchases, according to the statement.