New Delhi: A key takeaway from Prime Minister Narendra Modi’s visit to Kuwait this weekend is an agreement for that Gulf nation to participate in India's strategic oil reserves programme. According to a joint statement issued following Modi’s visit, both sides agreed to discuss participation by Kuwait in India's Strategic Petroleum Reserve Limited (ISPRL) programme.
“Both sides discussed ways to enhance their bilateral partnership in the energy sector,” the joint statement reads. “While expressing satisfaction at the bilateral energy trade, they agreed that potential exists to further enhance it. They discussed avenues to transform the cooperation from a buyer-seller relationship to a comprehensive partnership with greater collaboration in upstream and downstream sectors.”
According to the statement, India and Kuwait expressed keenness to support companies of the two countries to increase cooperation in the fields of exploration and production of oil and gas, refining, engineering services, petrochemical industries, and new and renewable energy. “Both sides also agreed to discuss participation by Kuwait in India’s Strategic Petroleum Reserve Programme,” the statement reads.
According to Muddassir Quamar, Associate Professor at the Centre of West Asian Studies in the School of International Studies, Jawaharlal Nehru University, this is a significant development. “If you look at Kuwait, it has been looking to enhance energy cooperation with India,” Quamar told ETV Bharat. “India and Kuwait have been working on strengthening the energy partnership for a long time. The Kuwaiti decision to participate in the ISPR programme will help in realizing this.”
Kuwait remains a reliable supplier of crude oil and liquid petroleum gas (LPG) for India. During the financial year 2023-24, Kuwait was the sixth largest crude supplier meeting about 3 percent of Indiaʼs total energy needs.
In a world where energy security has become synonymous with national security, Kuwait’s expected participation to contribute to India’s strategic oil reserves represents a pivotal moment in the evolving energy dynamics between the two nations. This move not only strengthens their bilateral relations but also underscores the growing importance of strategic oil reserves in safeguarding economic stability in an increasingly volatile global energy market.
The ISPRL is an Indian company responsible for maintaining the country’s strategic petroleum reserves. It is a wholly owned subsidiary of the Oil Industry Development Board (OIDB), which functions under the administrative control of the Ministry of Petroleum and Natural Gas.
The ISPRL maintains an emergency fuel store of a total of 5.33 MMT (million metric tons) or 36.92 million barrels (5.870 million cubic metres) of strategic crude oil, enough to provide 9.5 days of consumption. These strategic storages are in addition to the existing storages of crude oil and petroleum products with the oil companies and serve in response to external supply disruptions.
Indian refiners maintain 64.5 days of crude storage, so India has an overall reserve oil storage of 74 days. The ISPRL has developed strategic crude oil reserves in underground rock caverns at three locations in India: Visakhapatnam, Mangalore, and Padur (near Udupi in Karnataka). These locations were chosen strategically based on their proximity to refineries, ports, and transportation infrastructure.
The first strategic storage facility was commissioned in 2015 in Vishakhapatnam. It consists of two compartments and has a capacity of 1.33 million metric tonnes (MMT). Operational since 2016, the facility at Mangalore has been developed with advanced safety and environmental standards. It has a capacity of 1.5 MMT.
The largest of the three, the Padur facility, was completed in 2018 and plays a crucial role in India’s strategic oil storage plan. It has a capacity of 2.5 MMT. These underground rock caverns are highly secure and environmentally safe, designed to store crude oil for long periods without degradation. Crude oil from these caverns can be supplied to the Indian refineries either through pipelines or through a combination of pipelines and coastal movement. The estimated cost of the project was Rs 2,837 crore based on September 2005 prices. This excluded the cost of filling the crude oil in the caverns.
The crude oil stored in these facilities is generally held as buffer stock and is released only in extreme emergencies upon government approval. In addition to storing crude oil for strategic purposes, ISPRL also allows foreign companies and Indian oil marketing companies to lease storage space. This arrangement helps in better utilisation of storage facilities and also provides an additional source of revenue.
Recognising the need to expand its strategic reserves, the Indian government has approved the second phase of the strategic petroleum reserves programme, which includes the construction of additional reserves at Chandikhol in Odisha (4 MMT) and a new facility at Padur (2.5 MMT). These projects aim to increase India’s overall strategic reserve capacity significantly and enhance the country’s readiness against potential supply disruptions.
The ISPRL has been working with various international oil companies, including those from the United Arab Emirates (UAE) and Saudi Arabia, to lease parts of its storage capacity. These partnerships not only enhance India’s strategic reserves but also strengthen international ties, contributing to global energy security.
In 2017, ADNOC, the state-owned oil company of the UAE, became the first foreign entity to store crude oil in India’s strategic petroleum reserves. ADNOC leased 0.75 MMT of storage capacity at ISPRL’s Mangalore facility, marking a historic milestone in India-UAE energy relations. This agreement allowed ADNOC not only to store crude oil that could be used by India in case of emergencies but also to sell part of the stored crude oil commercially.
Now, Kuwait is set to become the second country after the UAE to participate in India’s strategic oil reserves programme. By contributing to ISPRL, Kuwait not only secures a stable and strategic market for its oil exports but also reinforces its position as a reliable partner in India’s energy ecosystem.
While speaking to ETV Bharat, Quamar also pointed out the part in the joint statement about the cooperation between India and Kuwait in the new and renewable energy sector. “India has been developing its own new and renewable energy sector,” he said. “There are immense opportunities for both sides in cooperation in conventional and new and renewable energy sectors.”
Explaining that India has been focusing on transitioning to new and renewable energy, Quamar said: “The Gulf countries are keen to partner with India in energy security efforts.”
