Oil Ministry seeks Rs 15,000 cr to build second phase of strategic reserves

Strategic storage reserves are underground rock caverns used to store crude oil that can be used in case of a supply cut-off to a country

Ministry for Petroleum and Natural Gas (MoPNG) has sought Rs 15,000 crore from the Ministry of Finance to build the second phase of the country's strategic petroleum reserves, Dharmendra Pradhan, Minister for Petroleum and Natural Gas said at the IndianOil Petrochemical Conclave in Mumbai today.

India is planning to build a 12.5 million tonnes of storage capacity under phase-two at four locations-- Bikaner in Rajasthan, Rajkot in Gujarat and Chandikhol in Orissa and Padur.

While India currently imports about 80 percent of its oil requirements, the International Energy Agency predicts that by 2020, India could become the world's largest oil importer. The government wishes to take advantage of the slump in crude oil prices which has hit a 12 year low trading around $35 a barrel.

The government had decided to set up 5 million metric tons of strategic crude oil storages at three locations-- Visakhapatnam, Mangalore and Padur.

However, only the facility at Visakhapatnam is commissioned with a capacity to store 1.33 million tonnes of crude oil. The Mangalore and Padur projects, both on the western coast of Karnataka, are nearly complete, awaiting pipeline connections from the nearest ports. These three underground storages were to store about 5.33 million tonnes of crude oil.

MoPNG also plans to extend financial partnerships to start-ups engaged in the oil and gas sector boost the 'Startup India' initiative.

Pradhan said: "All the oil public sector undertaking units (PSUs) will invest and provide financial partnerships to new start-ups engaged in exploration and production and downstream activities to encourage local innovation and add skills."

Pradhan said the Government is working on a policy to give 10 per cent purchase preference to local entrepreneurs to give a boost to the entrepreneurship ecosystem in the petrochemical industry.

B Ashok, Chairman, Indian Oil Corporation, said that the company plans to invest Rs. 7,650 crore in setting up a petrochemical complex at its Paradip refinery in Odisha in the next three to four years. The complex will have a 700,000 tonnes per annum polypropylene plant and ethylene derivatives complex to manufacture around 350,000 tonnes of mono-ethylene glycols.