India plans to fill strategic oil storage by the third week of May: Report

India plans to completely fill its strategic petroleum reserve (SPR) by the third week of May by moving about 19 million barrels into the sites by then, the managing director of the country's SPR said on Tuesday.

India is moving the oil to the SPR to help the country's refineries reduce their excess crude as the lockdown to contain the outbreak of COVID-19, the respiratory disease caused by the new coronavirus, has dented transportation and industrial fuel consumption in Asia's third-largest economy.

India's fuel demand in March declined by 17.8%, the lowest in over two decades.

India will be diverting cargoes for loading in April already bought by refiners Indian Oil Corp, Bharat Petroleum, Hindustan Petroleum and Mangalore Refinery and Petrochemicals Ltd. The refiners cut their crude processing after local fuel demand collapsed and are unable to store the excess oil themselves.

"As of now the plan is to fill the caverns by (the third week of May), before the arrival monsoon rains. We are buying oil from state refiners," H.P.S. Ahuja, the managing director of the Indian Strategic Petroleum Reserves Ltd (ISPRL) said. ISPRL is responsible for building and filling of SPR sites.

ISPRL wants to receive the cargoes before India's monsoon begins in May as the single point mooring system that can unload very large crude carriers (VLCC) at the port of Mangalore, which will feed two SPR sites, is shut during the three-month rainy season.

Reuters last month reported India planned to buy oil from the United Arab Emirates (UAE) and Saudi Arabia to fill its SPR to gain from low prices.

"We are taking advantage of low oil prices," he said, adding most of these cargoes are linked to official selling prices (OSP) for April.

Saudi Arabia drastically cut its OSPs for April to boost its oil sales after major producers failed to agree to extend a supply curtailment agreement that expired at the end of March.

Ahuja said ISPRL hopes to receive the last oil cargo on May 21, while IOC supplied a VLCC containing oil from the UAE on Monday.

The SPR is divided between three locations in southern India and can store about 37 million barrels of oil, equivalent to about 9.5 days of India's oil demand. A portion of the SPR is already filled.

The federal government has allocated about 38 billion rupees ($498.18 million) for the oil purchases, he said.