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India Looks To Create Strategic Coal And Gas Reserves

One of the world’s largest energy consumers and importers, India, is weighing the possibility of keeping strategic reserves of imported coal and natural gas in order to fend off future supply and price shocks, according to a senior government official.  

Although it is a major coal producer, India is currently grappling with a coal shortage and surging import prices of both coal and liquefied natural gas (LNG) amid a global energy crunch from Europe to Asia.

“So let us start thinking and discussing about keeping a strategic reserve of gas and imported coal, so that economies are able to tide over these supply shocks for about a month or so,” India’s power secretary Alok Kumar, said at the South Asia Power Summit, as carried by Reuters.

Unless India has a strategy to keep reserves, future high prices “will make energy security very challenging,” Kumar said. 

The idea of keeping strategic coal and natural gas reserves comes at a time in which India is in a coal and power supply crisis, which threatens electricity outages and industry slowdown.

The current coal shortage in India, which has an average of just three days worth of coal in stockpiles, could last for up to six months, Power Minister R.K. Singh said earlier this month.

“I can’t say I am secure… If you have 40,000-50,000 MW (of thermal capacity) with less than three days of stock, you can’t be secure,” Singh told The Indian Express in an interview. 

India’s massive coal fleet is running out of coal, threatening a power crunch in the country that relies on the dirtiest fossil fuel for most of its electricity generation. Coal is the major power generating fuel in India, accounting for 70 percent of electricity generation.

Coal inventories at many of the 135 coal-fired power plants are at critically low levels, while India scrambles to get more coal supply amid a global crunch of energy supply and skyrocketing prices of coal and natural gas.

The largest coal miner in the world, Coal India, has temporarily suspended supply to several industrial consumers in India as it prioritizes shipments to the coal power plants which provide most of the electricity in the country, the company told Bloomberg in a text message last week.

By Tsvetana Paraskova for Oilprice.com

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