India's build up of its strategic petroleum reserve could benefit US producers
India, increasingly reliant on oil imports, has finished the first unit of the country’s new strategic petroleum reserve, and is working on two more. The three facilities in southern India will hold a total of 39 million barrels of crude oil.India is already too reliant on Iran for much of its oil. In the long term, this is a poor bet since it is very likely that at some point in the future the religious bigots who run Iran will trigger sanctions. There is already some evidence that Iran is cheating on the nuke agreement with Obama.
The Visakhapatnam unit, on the eastern coast, began filling its underground caverns last summer. The Mangalore and Padur facilities are expected to be completed in late 2016, the U.S. Energy Information Administration reported on Tuesday.
The three facilities would provide about 13 days of oil import coverage. The Indian government plans to build additional reserves by 2020 to hold another 91 million barrels.
The facilities, once online, could further increase global oil demand and help absorb U.S. exports, said Wood Mackenzie oil market analyst Ann-Louise Hittle. “But those exports are not going to be targeted to India necessarily,” Hittle warned. India, she said, tends to buy crude from Iran, the Arab Gulf and West Africa.
The drop in oil prices is now enticing India to speed up construction and to fill its reserves, the Energy Information Administration said.