Mumbai: India has proposed building of a strategic oil reserve by Asian countries, which would help cushion supply disruptions and a new mechanism to ensure a sustainable global hydrocarbon economy.

The need for maintaining strategic reserves and judicious inventory management are measures developing countries in Asia must seriously consider, minister for petroleum and natural gas Murli Deora said at the first meeting of energy ministers of India, China, the US, Japan and South Korea here.

India, China, the US, Japan and South Korea consume nearly 45.5 per cent of the 3.77 billion tonnes of oil consumed globally. But rising prices of oil, which is vital for their energy security, is constraining their economic development.

"The high oil prices currently prevailing make oil inventory-carrying costs prohibitive, particularly for developing countries," he said in his keynote address on "Major Challenges and priorities of International Cooperation."

"We recognise that achieving sustained economic growth rates at over eight per cent in the future calls for commensurate energy availability. India's dependence on import of oil and gas renders economic progress vulnerable to international oil market developments. Hence, effective management of oil security assumes urgency," Deora said.

India has plans to construct tankage with a capacity to store 15 million metric tonnes (MMT) of oil in the long term, with five MMT of storage capacity expected in the first phase, he said

The one-day meeting is expected to issue a joint statement, urging the key oil producing countries to step up their investment and expand oil supply capacities to ensure adequate supplies for all.
The meeting is also expected to issue a call to the international community to work together to send a clear signal to the oil market so as to enhance market transparency and curb excessive speculation to maintain stability.