India and South Africa lead push to amass emergency fuel stockpiles

{"text":[[{"start":7.6,"text":"India, South Africa and other developing nations are making plans to increase emergency fuel reserves after the closure of the Strait of Hormuz underlined the power of stockpiles held by China, the US and other advanced economies."}],[{"start":22.049999999999997,"text":"Pretoria has proposed its biggest strategic build-up of crude in decades, while India’s largest state oil and gas producer ONGC announced a significant expansion of national stockpiles as part of a wider government build-up. "}],[{"start":35.9,"text":"Big importers from Pakistan to the Philippines have also recently advanced plans to build official buffers after the Iran war left countries in Asia and Africa facing potential shortages and having to ration fuel supplies. Many developing countries do not have reserves or are only able to cover a few days of national demand."}],[{"start":56.5,"text":"But these reserves would take time and money to build while many countries are again facing disruption in the short term after renewed Iranian attacks on shipping in the Strait, through which a fifth of the world’s oil supplies were shipped before the war."}],[{"start":70.5,"text":"“Countries that import all their oil are very vulnerable not just to price swings but also to product becoming unavailable,” said Nicolas Jaquier, emerging markets debt manager at Ninety One."}],[{"start":81.9,"text":"“From a national security perspective it’s a non-negotiable” to build up reserves, although many governments were also opting to cut back on fuel subsidies that cushioned demand, he said."}],[{"start":null,"text":"

"}],[{"start":92.95,"text":"With the Indian and South African combined measures adding up to about 50mn barrels of oil, the new stockpiling plans by emerging economies would be significant but would still struggle to plug shortages on the scale of the Hormuz crisis."}],[{"start":108.4,"text":"“The announcements seen from South Africa and India would normally be considered decent in size if they came to fruition,” said Neil Crosby, head of oil research at Sparta Commodities. "}],[{"start":120.10000000000001,"text":"“But we are dealing with a 10-20 million barrel per day problem out of Hormuz currently, and this basically dwarfs these new [strategic petroleum reserve] announced additions, in terms of what it does to oil prices,” he added."}],[{"start":133.20000000000002,"text":"Wealthier economies have used their own reserves to calm oil prices this year, with nearly 300mn barrels so far tapped out of a 400mn-barrel release that was launched in March through the International Energy Agency. The IEA requires its largely rich-country members to keep at least 90 days of imports on standby, a standard that is largely beyond most developing countries."}],[{"start":155.8,"text":"China’s strategic and commercial reserves, estimated at about 1.3bn barrels, have been even more important to stabilising markets as the backstop for Beijing’s ability to cut its imports to the lowest level in a decade this year."}],[{"start":170.15,"text":"Smaller economies often lack big refineries needed to quickly process reserves of crude in an emergency, while products such as petrol and jet fuel cannot be held in storage for long before they degrade."}],[{"start":182.15,"text":"Nevertheless, last week South Africa’s government published plans to rebuild government stocks to the equivalent of 60 days of imports, and require private fuel suppliers to hold 21 days in reserve, to “ensure long-term sovereign energy security”."}],[{"start":198.6,"text":"The plan would represent 36mn barrels of oil, or billions of dollars of purchases, based on daily demand in Africa’s most industrial nation, versus current estimated stocks of about 8mn barrels. "}],[{"start":211.1,"text":"But the reserves would mostly be made up of crude, despite South Africa having shed most of its refineries in the past decade. "}],[{"start":218.75,"text":"In addition to a lack of refining capacity, many countries rely on “hybrid” reserves that are partly leased out to oil companies or traders, Crosby said. “This means barrels . . . might still be commercially traded or rotated, making them part of the active supply chain rather than purely locked emergency stocks,” he said."}],[{"start":239.15,"text":"This month India’s ONGC approved a plan to add 1.75mn metric tonnes, or about 13mn barrels, to a strategic storage network of 40mn barrels. "}],[{"start":250.05,"text":"But in a reflection of the hybrid model, the government also signed a deal in May for Abu Dhabi’s national oil company to explore storing up to 30mn barrels in Indian reserves."}],[{"start":260.5,"text":"ONGC did not give a timeline for its expansion project and India has earmarked other plans for strategic oil stockpiles in the past decade only for them to fall by the wayside."}],[{"start":272.55,"text":"The world’s third-biggest oil importer currently relies on commercial stocks and refinery inventories for most of the crude that it can keep in reserve to feed domestic consumption of more than 5mn barrels a day."}],[{"start":285.45,"text":"Bangladesh is reportedly aiming to expand standby storage from 60 days of demand to 90 days next year, while Pakistan recently put out a call for consultants to advise on building its first strategic petroleum reserve. "}],[{"start":300.09999999999997,"text":"Lawmakers in the Philippines are debating a similar reserve. Morocco’s energy minister, meanwhile, told the country’s parliament in May that the government was planning to spend hundreds of millions of dollars on increasing fuel storage by the end of the decade."}],[{"start":314.74999999999994,"text":"Among developed economies, Australia also said in May that it would spend more than A$10bn ($7bn) to bolster its fuel and fertiliser stockpiles."}],[{"start":324.74999999999994,"text":"“In theory over the next couple of years, the combined SPR [strategic petroleum reserve] refill from the IEA party countries and initial fill from new announcements are going to put a floor under the oil price,” Crosby said. "}],[{"start":337.6499999999999,"text":"But that effect might be “a little overblown when there are so many larger unknowns” in Gulf supplies and the state of the global economy, he added."}],[{"start":352.2499999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785128060_9561.mp3"}