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India to allow foreign companies to store oil in Padur reserve

Reuters  |  NEW DELHI 

(Reuters) - on Thursday approved a plan to allow foreign companies to store in the strategic reserve, said, as the world's third biggest importer seeks to cut storage costs.

Global oil producers, including Saudi Arabia, have shown interest in investing in India's strategic oil storage, which the country uses to hedge against security risks as it relies heavily on

has built emergency storage in underground caverns at three locations to hold 36.87 million barrels of crude. The underground 2.5 million tonne strategic reserve in southern state has four compartments to hold about 18.5 million barrels of oil.

"Participation by companies will significantly reduce budgetary support of government of by more than 100 billion rupees ($1.38 billion) based on current prices," Prasad told a conference.

He said India would have the first right to the oil stored in the caverns in case of emergency.

India imports about 82 percent of its crude requirements.

India hopes to invite bids in three to four months to fill Padur, the of Indian Reserve Ltd said last month.

The site located is about 5 km (3 miles) from the south and 40 km from the and

India has already leased half of its Mangalore reserve to (ADNOC) for seven years. ADNOC has been allowed to sell some of its oil from the storage to Indian refiners.

In the first phase, India has built 3 strategic petroleum reserves with combined capacity of 5.33 million tonnes, enough to meet demand for 9.5 days.

In the second phase, the country is building two storage facilities with total capacity of 6.5 million tonne that could supply an additional 11.5 days of India's oil needs based on current consumption trends.

($1 = 72.3800 Indian rupees)

(Reporting by Nidhi Verma. Editing by Jane Merriman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, November 08 2018. 21:42 IST