The Government of India has decided to lease out the space in the underground rock caverns, considered as the safest means of storing hydrocarbon, to domestic and international firms to store oil, which it had earlier planned to fill as part of its strategic petroleum reserve.
A report by PTI cited a top executive saying shortly an expression of interest for leasing out of the storages would be floated.
Change of mind
In the Union Budget 2023-24, the Indian government had announced a plan to purchase crude oil worth 50 billion rupees ($601.78 million) for caverns in the southern cities of Mangalore and Visakhapatnam, but keeping in mind the emerging trends in global oil markets, the finance ministry, in January this year, said India has deferred the plan to fill parts of its strategic petroleum reserve.
Where are these oil reserves situated?
Strategic underground storages have been built at three locations in southern India – Visakhapatnam in Andhra Pradesh, Mangalore, and Karnataka’s Padur – to store 5.33 million tonnes of oil that can be used in any emergency situation like supply disruption or war.
They have been built by India Strategic Petroleum Reserve Ltd.
Who is storing oil here?
National Oil Company (Adnoc) based out in UAE’s Abu Dhabi has already hired half of the 2.5 million tonnes storage capacity at Padur and 1.5 million tonnes facility at Mangalore.
The remaining 1.25 million tonnes at Padur has been filled by Indian Strategic Petroleum Reserves Limited, or ISPRL, 0.75 million tonnes of vacant storage at Mangalore will be leased out, ISPRL CEO and Managing Director LR Jain told media on the sidelines of India Energy Week.
In Visakhapatnam, out of the total 1.33 million tonnes storage, 0.33 million tonnes was a space that was built for the Hindustan Petroleum Corporation Ltd (HPCL).
Of the remaining, HPCL has hired 0.3 million tonnes more, and the rest of the storage will be leased out, Jain added.
India will have first right to use the oil
Jain further said companies like Adnoc can store oil in the reserves, but India will have the first right to use the oil.
“So, India can call for the reserves in any emergency situation,” he added.
Number of oil companies including Adnoc use such storage to hold oil for further sale to users.
India, the world’s third-largest oil importer and consumer, imports over 80 per cent of its oil requirements.
With inputs from PTI
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India to lease out space in strategic underground oil storages to local, global firms
