India’s energy availability remains undisrupted amid rising border tensions on account of oil inventory and oil marketing companies’ (OMCs) crude tie-ups, several people aware of the matter told Moneycontrol.
India’s state-run OMCs have tied up for crude oil supply for the next three months, while the country also maintains strategic oil reserves for emergency situations, aiding the country in navigating the current border tensions between New Delhi and Pakistan. State-run OMCs include Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL).
“Until now, the situation can be managed. Indian Oil has crude oil tenders booked for the next three months while the company has inventory of 40-42 days. The tensions between India and Pakistan are not expected to impact India’s domestic oil market as of now,” an official told Moneycontrol on condition of anonymity, given the sensitivity of the situation.
India’s total oil reserves stand at around 74 days; where Indian Oil inventory is for 40-42 days, government’s special purpose vehicle Indian Strategic Petroleum Reserves Ltd (ISPRL) has reserves for over 9 days and rest is maintained by BPCL and HPCL.
The official added that oil supply is not expected to be disrupted, given that tensions do not escalate further. India’s crude oil consumption comes close to 5 million barrels per day (bpd), in which over 85 percent is met through imports.
India sources crude oil from diverse set of producing nations including Middle-East countries, Russia and the US. As of now, no impact of the escalation between India and Pakistan has been seen on freight or insurance costs, an industry expert told Moneycontrol.
“As of now, not much impact has been seen on insurance rates or freight rates, etc. Crude delivery should happen as it is. Obviously, it is a developing situation, but as of now things look okay. We have crude oil stored in our caverns and oil companies also maintain inventory. There is enough refining capacity away from the border states,” said Prashant Vasisht, VP & Co-Head, Corporate Ratings at ICRA.
The tensions between India and Pakistan have not reached a point where energy security of the country becomes a concern, said another industry expert, on condition of anonymity. Both petroleum products and crude oil availability is ensured as of now, the aforementioned source told Moneycontrol.
OMCs’ assure of enough supply
Earlier in the day, both Indian Oil and Bharat Petroleum issued statements asking consumers to not resort to panic buying amid rising border tensions. The companies assured of sufficient fuel availability across their networks to meet country’s energy demand.
HPCL also told Moneycontrol that it has sufficient fuel and LPG stocks across the country, advising consumers against panic buying.
Meanwhile, all major oil refineries along the Western border have been asked to remain "more alert”, a source privy to the matter told Moneycontrol. “There are defined security protocols which are followed all the time. The same is being continued even now. All necessary actions are being taken,” the source added.
Tensions between the two neighbouring countries heightened after Pakistan on May 8 launched munitions and drones on the border states of Jammu & Kashmir, Punjab, Rajasthan and Gujarat. The attacks were thwarted by the India’s aerial defence systems.
India launched ‘Operation Sindoor’ in the night of May 6-7, hitting nine terror bases in Pakistan and Pakistan-occupied Kashmir, two weeks after 26 people were killed in a terror attack in Kashmir’s Pahalgam on April 22.
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