December 25, 2011 [The Indian Express] - India plans to nearly triple the size of an emergency oil stockpile that it is building as insurance against supply disruptions, Oil Secretary G C Chaturvedi has said.
The nation which is 79 per cent import dependent to meet its crude oil needs, is building under-ground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tons of crude oil. This is enough to meet nation’s oil requirement of 11-12 days.
“We are currently building 5.33 million tons of strategic crude oil storage by 2012. We plan to have another 12.5 million tons of storage by 2020,” he said here.
He said the stockpile will essentially be used during supply disruptions but may also come handy in case of high price fluctuations.
The storage at Visakhapatnam, with a capacity to store 1.33 million tons of crude oil in underground rock caverns, will be completed early next year.
A similar facility in Mangalore will have a capacity of 1.55 million tons and would be mechanically completed by November 2012. A 2.5 million tons storage at Padur, near Mangalore, would be completed by December 2012.
Chaturvedi said Padur would have another 5 million tons of storage in the next phase and possible sites in Gujarat state and Rajasthan’s salt caverns are being explored.
India will join nations like the US, Japan and China who have strategic reserves. These nations use the stockpiles not only as insurance against supply disruptions but also to buy and store oil when prices are low and release them to refiners when there is a spike in global rates.
However, the storage India is currently building is very small compared to the 90-day strategic stockpile in the US.
The expansion would cover for 40 days requirement.
India currently has 11.08 million tons of crude oil storage capacity in refineries and 14.41 million tons of petroleum products, which is enough to cover for 74 days of supplies, he said.
Stating that the cost of filling the 5.33 million tons strategic storage would be about Rs 18,000 crore, Chaturvedi said the government is exploring options of leasing out capacities in the storage depots to foreign firms for a fee.
India Strategic Petroleum Reserves Ltd is building the strategic stockpile. It is a wholly-owned subsidiary of Oil Industry Development Board (OIDB) – a government body that lends money to energy projects.
Like the US, the government may buy crude oil when rates are low for stockpiling. It may release it to refiners during times of spike in global crude rates like those witnessed in July 2008 when prices touched an all-time high of USD 147.
