India to have strategic oil reserve by October 2011

New Delhi, Apr 15 (PTI) India will complete building its
first strategic crude oil storage by October 2011 in an effort
to insulate itself from supply disruptions.
India, which is 75 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 13-14 days.
"The storage at Visakhapatnam will be mechanically
completed by October 2011," said Rajan K Pillai, Chief
Executive Officer of India Strategic Petroleum Reserves Ltd -
the state-owned firm building the strategic stockpile.
Visakhapatnam will have capacity to store 1.33 million
tons of crude oil in underground rock caverns.
"Huge underground cavities, almost ten storey tall and
approximately 3.3 km long are to be built (in Visakhapatnam),"
he said.
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.
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 building is very small
compared to the 90-day strategic stockpile in the US. New
Delhi was considering to raise the storage capacity to 15
million tons to cover for 45 days requirement but no decision
has been taken as yet.
The over 5 million tons strategic storage facility,
Pillai said, was being built at an estimated cost of Rs 2,397
crore (at 2005 prices). "There is likely to be a price
escalation because these cost estimates are based on 2005
prices. We think the cost may cross Rs 3,000 crore," he said.
ISPRL is a wholly-owned subsidiary of Oil Industry
Development Board (OIDB) - a government body that lends money
to energy projects.
Pillai said the cost of building the strategic stockpile
is being provided by OIDB as equity to ISPRL.
"The three storages will be able to meet nation's oil
requirement of 13-14 days (in case of emergency)," he said.
The cost estimate does not include the cost of purchasing
5.3 million tons of crude oil. "The crude procurement and how
it will be managed will be the responsibility of the
Government. Our job is to build the storage," he said.
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. PTI