In a move to take advantage of the slump in global crude prices, the oil ministry has sought funds of around Rs 5,000 crore from the finance ministry to fill up the strategic oil reserves.

Petroleum ministry officials said the dip in global crude prices is a good time to fill up the caverns and we have “asked Abu Dhabi National Oil Company (Adnoc) and Saudi Aramco, with whom we have an agreement to fill up the reserves, or else the government would fill it up on its own”.

The officials said they have asked the finance ministry to clear funds of around Rs 5,000 crore to fill up the caverns.

Crude prices have fallen around 40 per cent in March as the impact of coronavirus plunged demand, while supplies are growing as Saudi Arabia and Russia failed to agree on the production output.

While the Brent is hovering around $31 per barrel and WTI around $28 per barrel, Goldman Sachs has forecast that a $20-per-barrel Brent is “a real possibility.”

The Indian Strategic Petroleum Reserves Ltd (ISPRL) has built and commissioned underground rock caverns for storage of 5.33 million tonnes of crude oil at three locations — Visakhapatnam (1.33mt), Mangalore (1.5mt) and Padur (2.5mt). This can support 9.5 days of net imports. The government created a special purpose vehicle — Indian Strategic Petroleum Reserves Ltd — to build these reserves.

The strategic cavern has allowed foreign oil companies to stock oil in the storages on the condition that the government will get the first right to use in the case of an emergency or supply disruptions.

Adnoc will fill up part of the reserves in Mangalore and Padur. State-owned HPCL uses a third of the Visakhapatnam facility to store crude used in its refineries.