With consumption of petroleum products dropping globally in recent months owing to the disruption of the economy by the novel coronavirus, the Narendra Modi government is looking to take advantage of falling oil prices.
One method for this is to expand storage of oil beyond India's shores. Union Minister for Petroleum and Natural Gas Dharmendra Pradhan on Monday told a news channel that India is looking to store some "low-priced" US oil in facilities in the US as India's own storage was full.
“We are exploring some possibility if we can store some of our investment in a different country... we are exploring the possibility in the USA if we can store some of the low-priced oil,” Pradhan told CNBC TV18.
Reuters reported India's plan could be similar to a move by Australia, "which, last month, said it would build up an emergency oil stockpile initially by buying crude to store in the US Strategic Petroleum Reserve to take advantage of low oil prices".
Reuters reported, "India, which is the world’s third-biggest oil consumer and importer, had already filled its 5.33 million tonnes of strategic storage and parked about 8.5-9 million tonnes of oil on ships in different parts of the world, primarily in the Gulf."
Pradhan also announced the Indian government was planning to boost its domestic oil storage capacity by 6.5 million tonnes.
The proposal by Pradhan comes at a time when use of petroleum products has fallen steeply amid the economic slump on account of the coronavirus. Reuters reported, "India’s fuel demand nearly halved in April to its lowest level since 2007 as a nationwide lockdown and travel curbs to combat the spread of novel coronavirus eroded economic activity. So far in May, India’s petrol and diesel demand is about 60-65 per cent of what it was in the same month last year..."
Despite the steep fall in consumption of petroleum and the slump in crude prices, the Modi government has shown little inclination to cut prices.
In an interview to The Hindu, Pradhan said the "government’s view is to take a cautious and conscious approach of a balance in price, save it and use it for welfare".