The Cabinet Thursday approved filling up of the underground strategic oil storage at Padur in Karnataka by foreign oil companies, who could use it as a storage for trading in the region but will have to part with the oil in case of an emergency in India.
India has built 5.33 million tonnes of emergency storage in underground rock caverns in Mangalore and Padur in Karnataka and Visakhapatnam in Andhra Pradesh.
While a third of the Visakhapatnam facility has been hired by Hindustan Petroleum Corp Ltd (HPCL), Abu Dhabi National Oil Co (ADNOC) and government of India has filled the storage at Mangalore. The 2.5 million tonnes Padur facility remains empty.
The Union Cabinet headed by Prime Minister Narendra Modi approved the filling of Padur storage by overseas national oil companies, Law and IT Minister Ravi Shankar Prasad told reporters here.
"The filling of the strategic petroleum reserves (SPR) under public-private-partnership model is being undertaken to reduce budgetary support of government of India," an official statement issued after the meeting said.
Padur storage has four compartments of 0.625 million tonnes each.
The Indian Strategic Petroleum Reserves Ltd (ISPRL) has constructed and commissioned underground rock caverns for storage of total 5.33 million tonnes of crude oil at three locations -- Vishakhapatnam (1.33 million tonnes), Mangalore (1.5 million tonnes) and Padur (2.5 million tonnes).
The total 5.33 million tonnes capacity under Phase-I of the SPR programme is currently estimated to supply about 9.5 days of India's crude requirement.
Prasad said the storing of oil by foreign firms will help save the government Rs 100 billion in filling cost.
In the Phase-II, India plans to build an additional 6.5 million tonnes facilities at Chandikhol in Odisha and Padur in Karnataka, which is expected to augment the emergency cover against any supply disruption by another 11.5 days.
Oil traders and producers could use the Padur storage to stock their oil and sell it to refineries in the region on commercial terms.
India, which meets 83 per cent of its oil needs through imports, will have the right of first refusal to buy the crude oil stored the facilities in case of an emergency, he said.
Indian refiners maintain 65 days of crude storage, and when added to the storage planned and achieved by ISPRL, takes the Indian crude storage tally to about 87 days. This is very close to the storage of 90 days mandated by IEA for member countries.