Strategic petroleum reserve an economic analysis of SPR in India
Student name: Mr Mettisila Michael Carey
Guide: Dr Kaushik Deb
Year of completion: 2010
Host Organisation: The Energy and Resources Institute (TERI)
Supervisor (Host Organisation): Ms Ruchika Chawla
Abstract: Strategic Petroleum Reserve is an emerging energy security issue. It’s an upcoming trend among the
nations who solely depend on the imports from the volatile Gulf countries. The SPR is a tool to mitigate
against short term oil disruptions and price hikes.
The proposed study aims to provide analytical economic and policy inputs towards SPR planning in
India. A study is conducted on the various SPR’s developed in other countries as well as the norms
according to the IEA. Analysis of SPR decision-making in other countries on various aspects can provide
useful insights for India.
The project conducts an economic analysis on the various petroleum products. Trending has been
carried on the light and middle distillates with the GDP of the country. Energy intensity for the last 20
years has been analyzed to check if there is any correlation between the price change and the effect on
the GDP loss.
SPR in various countries will provide useful insights into the criteria adopted for SPR decisions on
Optimum inventory,
Type of holding (e.g. public vs. private inventories),
Triggers and mechanisms for SPR release,
Funding methods,
Organizational structures and
Associated policy aspects
Learning from the literature review will constitute the background material for the study of SPR in India.
This study will evaluate the role of an SPR as distinct from and also in conjunction with commercial
stocks, while also considering the option of India emerging as a petroleum storage hub.
It was generally believed that the mere existence of a large, operational reserve of crude oil would deter
future oil cutoffs and would discourage the use of oil as a weapon. In the event of an interruption,
introduction of oil into the market from the Reserve was expected to help calm markets, mitigate sharp
price spikes, and reduce the economic dislocation.
