India to have 18 mt crude stock by 2020

The government is looking to build storage capacity for about 18 million tonnes (mt) of crude by 2020 in a bid to insulate India, which is heavily dependent on imports for its energy needs, from supply disturbances. The first phase of this strategic stockpile--5.33 mt--will be commissioned by April 2014.

Indian Strategic Petroleum Reserves Ltd (ISPRL), a special purpose vehicle owned by the Oil Industry Development Board (OIDB), is now building storages in underground rock caverns at Visakhapatnam (1.33 mt), Mangalore (1.5 mt) and Padur, Kerala (2.5 mt).

While the Visakhapatnam project will be commissioned by December this year, the other two will be on track before April 2014, say people aware of the development. OIDB is a statutory body set up by the government in 1975 to provide financial assistance for the development of the oil industry. The strategic stockpile the government is building excludes the 22.04-mt buffer stock that oil companies are required to keep.

“Once the first phase is commissioned, we will have crude inventory worth about Rs 24,000 crore for 13 days. Almost 90 per cent of the work is completed there. The detailed feasibility report of an additional 12.5 mt is before the Cabinet for clearance,” said a petroleum ministry official, who did not want to be named. As per government estimates, the country will have a total net import of 179 mt by 2019-20. Keeping in mind strategic and buffer stocks for 90 days, India needs a total storage capacity of 44 mt.

At present, India is meeting almost 80 per cent of its energy needs through imports.

“The government wants to take the lead and have a strategic stocks of 17.83 mt, while public sector undertakings and other companies may add more than 4 mt to their buffer stocks of 22.04 mt. This is calculated on the basis of net imports that the country will have,” the official added.

India will also become one of the first countries in Asia to have storage capacity in underground rock caverns. “Our specialty is that we will have underground rock cavern storage like Japan, Sweden and South Korea. Most other nations have salt caverns. The crown of our caverns lies at least 35 metres below the sea level,” said ISPRL chief executive officer Rajan K Pillai.

The total cost of the first phase is around Rs 4,000 crore. OIDB is funding the entire construction cost. The additional storage facilities in the second phase are being considered at locations in Gujarat and Odisha.

Out of the 1.33 mt in Vishakhapatanam, 300,000 tonnes would be under Hindustan Petroleum Corp Ltd’s control, for which the state-run marketing company has paid Rs 234 crore to ISPRL. In all the three locations, Engineers India Ltd is leading the construction works, as per instructions from the government.