Pakistan’s Oil Crisis vs India’s Strategic Oil Reserves | Ali Pervaiz Malik | StudyIQ IAS English

Added: 2026-05-08

[00:00:00]I was reading a statement uh by petroleum minister of Pakistan and that brings me to the question that is the India's energy security visav the oil crisis that Pakistan is facing right now. Now this topic it is related to the strategic petroleum reserve to the state of farmers as well as their trap of the IMF and the fiscal space as well. So this connects with the GS3 and with GS2 and it has relevance in your essay as well. Now when it comes to the statement that is there so Pakistani petroleum minister Ali Purveves Malik he have said and publicly admitted that we don't have even a day's worth of the strategic petroleum reserve. At the same time when it comes to the oil price they have surged to $126 per barrel. This is the highest since 2022 and it is because of the disruptions that we are facing at the state of homes because of the US and Iran tensions and there had been complete blockhead of the state of farmers. When it comes to Pakistan to Pakistan over here it only holds about 5 to 7 days of commercial crude and when it comes to the refined products they are just available with the oil marketing companies in Pakistan for about 20 to 21 days. over here in the Pakistan for uh when when it comes to the April so the oil bill had tripled to $800 million per week and even the petrol prices they have risen by 42.7% because of the West Asian crisis. So it was earlier 321 Pakistani rupee which has risen to 458 Pakistani rupee per liter. All right. The minister they have contrasted he has contrasted the India's resilience as well and he said that India has 60 to 70 days of reserves that are there and that could be released only with one signature when it comes to India. So when it comes to India, so what is the strategic petroleum reserve journey that we had in India? In 1991, we have the balance of payment crisis and when it comes to the foreign reserve, we could barely fund three weeks of the imports and here the oil vulnerabilities were exposed at the same time when there were Gulf Wars. So after the Gulf war uh Wajpi who Wajpi government he has proposed that there should be a strategic petroleum reserve so that we could have long-term energy security solution for India. In 2024 ISPL that is Indian strategic petroleum reserve limited it was incorporated as a wholly owned uh special purpose vehicle under oil industry development board which is under ministry of petroleum and natural gas. So there was strategic petroleum reserves that were constructed in 2004 and in 2017 the second phase had been announced which will be located at Chandi Cole in Odessa and additional uh cavens will be filled in the padur as well. Now in 2020 when it comes to the covid period so in the covid period the barrel prices or the oil prices they were very low. So there the SPR were filled with the full capacity and at that point of time the oil it was just you know $20 per barrel and thus we have saved 5,000 cr rupees at that point of time. Now in 2021 Edno that is the national oil company of UAE that is Abu Dhabi National Oil Company and ISPRL they have signed a MOU over here in this or by this MOU UAE will store the crude in India's Padur Kevin and this is where we are moving forward with the bilateral energy relationship with UAE and with UAE. Now this is a prelims fact feed uh fact sheet where you could be asked about the questions about India's SPR.

[00:03:43]So we have the phase one total capacity it is 5.33 metric million tons and we have emergency coverage for the 9.5 days but when it comes to the oil that is with the oil marketing companies as well. So the total national capacity that is with the SPR and the oil marketing company's stock we have total uh you know uh emergency coverage for 74 days. Now the phase one investment was $600 million and we had these uh three locations where the SPR had been uh you know constructed we have at Vishaka in Andhra Pradesh. This is on the east coast and we have 1.33 metric million tons of the SPR. Then Mangaluru and Padur that is uh they are located in Karnataka and uh there also we have the stage one or phase one of the SPR that was constructed. The phase 2 is right right now in progress in Chandi Cole and Padur will be expanded and this is in PPP mode and ultimately the target is that we reach the 90day of uh the uh reserves that should be maintained in India. So this is where we have the SPR or the strategic petroleum reserve that is located right now. It is located at Vishaka Patnam and Padur and Mangalore.

[00:04:57]In phase two, Chandi Cole and Padur they will be Padur the uh reserves they will be you know upgraded and Chandi coal will be a new uh SPR or the strategic petroleum reserve that will be there. So now when it comes to the energy crisis that Pakistan is facing, so there is only about 5 to 7 days of commercial reserves that is there. There is no strategic reserves that the Pakistan have. And at the same time when it comes to the refined product with OMC's or the oil marketing companies that is only of about 20 to 21 days there is no buffer beyond this commercial cycle. Now oil bill have import bill it has tripled to $800 million per week as well as the petroleum prices have surged to 42.7%.

[00:05:45]Right now it is under the IMF bailout conditions. The Pakistan is under IMF bailout conditions and there the conditions is that they they mandate the petroleum levy. you you cannot give the subsidies, you cannot uh you know cut down the uh prices in Pakistan and therefore that limits the fiscal response of the government when it comes to the petroleum prices in Pakistan. Now there is the uh the the news of the back channel negotiation that is being done with the IMF where IMF have said that okay you can have 80 rupees per liter reduction when it comes to the petroleum prices. So this is where there is a policy paralysis that had been exposed with Pakistan because of the IMF conditions which had been laid down on Pakistan. Now there could be civil unrest because of this uh inflation that is going on in Pakistan and there is no production base with Pakistan. Pakistan does not produce any oil domestically.

[00:06:43]It is 100% dependent upon the imports on the Gulf roots that are there. At the same time, India is resilient when it comes to the energy crisis because we have 74 days of the coverage and when it comes to the fiscal space there has or we have seen even because of the rising crude oil prices that is there the petroleum prices they have not increased in India. So there is the excise that had been cut to cushion the customers in India. Then we are also diversifying the sources. We are moving to Russia. We are taking oil from Russia, from Middle East, from Venezuela, from West Africa.

[00:07:20]So we are sourcing or diversifying our sources as well. And India is also not under IMF program. So we have uh autonomy when it comes to the policy that we decide for the Indian citizens.

[00:07:32]At the same time, there is another factor as well and that is that we have robust foreign exchange reserve. India right now has more than uh $600 billion dollars and this is acting as a macro shield. We are the world's fourth largest refining capacity and thereby we were able to absorb the shock and we were not that much uh you know yes we are also hit by the west Asian crisis but not as much as Pakistan has been hit and this has been uh you know publicly admitted by Pakistan right now. So this is how a global shock it impacts the economy. There is any kind of external shock like for example we have seen war blockade or any oil spike. So that leads to the market channel. There is higher crude prices. There is higher freight or even the higher insurance cost which are there. Now these trickle down towards the domestic channel. You will see that the retail fuel prices, transport, fertilizer and food the prices will went up. when they will go up. So there will be inflation, there would be pressure on the current account deficit and the currency pressure will be there and ultimately there is or there has to be a policy response like for example the uh the crude oil it could be draw down from the strategic petroleum reserve tax tweaks could be there and even subsidies could be provided in the case of fertilizers.

[00:08:55]Now what could be the implications? So implication could be that in the term of short-term there could be oil shock because of the oil shock the inflation will rise in Pakistan and in Pakistan you can see that there will be civil unrest in the Pakistan and the similar import dependent economies as well. In the medium term Pakistan may face the IMF program renegotiations because it will have to you know move down or cut down the prices on the petroleum prices.

[00:09:24]At the same time, India has the strategic leverage when it comes to the IMF program. All right? Because we have autonomy are we are not under IMF bailout as well and the long-term implication will be that there is the state of farmers vulnerability. Now we have seen the state of Ammer's vulnerability and that is why we are moving or India will move ahead with the renewable transition that we will see in the coming years and already the government have started working in the direction as well because there is a new you know methanol or green methanol plant that will be or that will come up in the dinal port authority that is located in Kandla. All right. Now these are the government step that the government has taken when it comes to ISPRL. So we have the strategic petroleum reserves which are under the uh OIDB and also it manages the complete 5.33 metric million tons underground cavens which are located at three locations in the phase one. Then India also have the associate membership of IEA. This gives the access to the global emergency data and coordination mechanism as well. we have taken the or we we were given the associate membership in 2017. Then when it comes to Edno MOU so that was signed in 2021 and over here this is the national oil company of uh UAE which stores the crude at Padur. This is first commercial strategic hybrid SPR partnership that we entered with any nation or with any company. Then the second SPR had been uh you know that had been released and uh when it comes to Chandi Cole and Padur there will be expansion this will be in PP mode and uh ultimately the target will be that we should have more than 90 days of the reserves that should be built in India and also when it comes to the renewable energy focus so PM Kusum and ISTs like renewable energy schemes are running right now and that is for reducing the fossil fuel dependence in the electricity sector that the government is planning for. Then when it comes to state of Homos crisis, so we have developed the Chabhar port as well.

[00:11:32]This is the alternative access route bypassing the Homos and there is a strategic insurance against the chokepoint risk that is there in state of Homos and we can use the Chahabar port as well. So that is all in today's session and at the same time if you are preparing for IS- 2027 or 20 2028 you can enroll into UPSC is resolution GS foundation puti batches. All right so these batches if you are enrolling into these batches what you can do is you can use the code that is BRS live and by using this code you will get the maximum discount. So that is all in this session. Thank you very much guys for joining me over here and do not forget to like, share as well as subscribe this v uh this channel so that you do not miss any of the updates in the future.

[00:12:18]Thank you. Bye-bye. Take care and jin.