News Release Details
India is open to strategic energy tie-up with US
New Delhi 26-Jul-2007
New Delhi appears to be open to entering into a strategic energy partnership with Washington on the condition that India retains the right to decide when and how much of its upcoming strategic crude reserves it will release.This comes in response to a proposal in the HR-6 energy legislation, passed by the US senate on July 21, to establish strategic energy partnerships with major energy producing and consuming countries. The US also proposes to establish a Petroleum Crisis Response Mechanism (PCRM) with the governments of India and China to coordinate the draw down of strategic petroleum reserves with the US. The mechanism would also include emergency demand restraint measures, fuel-switching preparedness and demand intensity reduction. Communicating its views in a letter to the ministry of external affairs (MEA), the petroleum ministry has suggested that any release from India's strategic crude oil reserves should be strictly based on domestic assessments. 'The decision to release or not or when and how much to release would rest solely with India. Further, the releases could be made even to modulate the impact of high oil prices, if found necessary, in our domestic consumption," the ministry stated in its note. India is in the process of setting up strategic storage facilities for 5 million tone (mt) of crude oil. The facilities are being set up at three locations: Vizag (1 mt), Mangalore (1.5 mt) and Padur near Mangalore (2.5 mt). They are expected to be complete in four years. Cooperating with the US in establishing a PCRM will help India and China gain access to the reserves of other countries in times of crisis. This is particularly crucial as the demand for oil is growing faster than supply, making the global market vulnerable. Any unexpected cut in supplies due to events in an oil-producing nation can lead to a rapid rise in prices. These price spikes can cause significant economic damage to oil import-dependent countries like India and China. To guard against this, the US and other developed countries have built strategic oil reserves. The International Energy Programme (IEP) coordinates the release of these reserves and lets members share them. The creation of the PCRM will allow developing countries to apply for access to these reserves in times of crisis.
New Delhi 26-Jul-2007
New Delhi appears to be open to entering into a strategic energy partnership with Washington on the condition that India retains the right to decide when and how much of its upcoming strategic crude reserves it will release.This comes in response to a proposal in the HR-6 energy legislation, passed by the US senate on July 21, to establish strategic energy partnerships with major energy producing and consuming countries. The US also proposes to establish a Petroleum Crisis Response Mechanism (PCRM) with the governments of India and China to coordinate the draw down of strategic petroleum reserves with the US. The mechanism would also include emergency demand restraint measures, fuel-switching preparedness and demand intensity reduction. Communicating its views in a letter to the ministry of external affairs (MEA), the petroleum ministry has suggested that any release from India's strategic crude oil reserves should be strictly based on domestic assessments. 'The decision to release or not or when and how much to release would rest solely with India. Further, the releases could be made even to modulate the impact of high oil prices, if found necessary, in our domestic consumption," the ministry stated in its note. India is in the process of setting up strategic storage facilities for 5 million tone (mt) of crude oil. The facilities are being set up at three locations: Vizag (1 mt), Mangalore (1.5 mt) and Padur near Mangalore (2.5 mt). They are expected to be complete in four years. Cooperating with the US in establishing a PCRM will help India and China gain access to the reserves of other countries in times of crisis. This is particularly crucial as the demand for oil is growing faster than supply, making the global market vulnerable. Any unexpected cut in supplies due to events in an oil-producing nation can lead to a rapid rise in prices. These price spikes can cause significant economic damage to oil import-dependent countries like India and China. To guard against this, the US and other developed countries have built strategic oil reserves. The International Energy Programme (IEP) coordinates the release of these reserves and lets members share them. The creation of the PCRM will allow developing countries to apply for access to these reserves in times of crisis.