India has begun selling crude oil from its Strategic Petroleum Reserve (SPR) following a new policy that allows the commercialization of SPR storage spaces, Reuters reported, citing three sources familiar with the matter. India has enacted a policy that allows state-owned Indian Strategic Petroleum Reserves Ltd (ISPRL) to lease 30% of the total 37 million barrels capacity to local and foreign firms.
ISPRL filled the SPRs with cheap oil last year and needs to sell some of that to make way for leasing. The UAE’s ADNOC has leased one of the twin chambers at the 11 million-barrel SPR facility in Mangalore. ISPRL is gradually releasing 8 million barrels of SPR crude to make space to lease to state refiners MRPL and HPCL, the sources said.
In return, the two state refiners will purchase oil from the ISPRL at a discount to the official selling price set by the producer countries. So far, MRPL has bought about 5.5 million barrels of the UAE’s Upper Zakum from ISPRL’s Mangalore facility. ISPRL is seeking to empty the chamber by February 2022 because MRPL wants to store 300,000 tons of a different crude grade, the sources added. Meanwhile, HPCL will take a similar-sized space in the Vizag SPR, which contains Iraqi Basra oil. Since HPCL wants the Iraqi grade, the full volume does not need to be sold.
