Land problems stall plan for strategic petroleum reserve

The Indian strategic oil reserve, a project conceived in 1998, and formally announced in 2003, is facing hurdles on account of non-availability of land.

Three locations had been earmarked initially for building storage for 5 million metric tonnes per annum (MMPTA) of oil at a cost of around Rs 11,200 crore over nine years.

At the outset itself, one of the sites "" Rajkot "" was rejected by the defence ministry. It was then decided to set up the reserve in Visakhapatnam, Mangalore and Udipi. The Mangalore site will store 1.5 MMTPA, while Visakhapatnam will store 1 MMTPA and Udipi 2.5 MMTPA.

The Mangalore site was considered most suitable and a couple of years ago, the process for acquiring 87 acres was begun. However, the plan is stuck as this piece of land forms part of the 550 acres under acquisition for the ONGC-Mangalore Refinery and Petrochemicals Ltd (MRPL) expansion plan.

"Since the piece of land identified for setting up the strategic storage falls in the middle of the site, ONGC feels that it may not be able to accommodate the reserve," sources told Business Standard.

Faced with this piquant situation, the petroleum ministry is now examining the possibility of locating the facility within the proposed special economic zone being planned by ONGC-MRPL at Mangalore. Engineers India Ltd is now working on submitting a detailed report on whether this strategy is feasible.

The government has limited choices as the option of increasing the capacity at Udipi is not feasible because of security reasons. Moving the plan to an alternative location would mean considerable time and public funds being used up repeatedly.

"In addition, the choices are limited to coastal areas coupled with hard rock formation and security considerations make the choice of site for establishing underground storage limited," sources added.

The Karnataka government is keen on both the reserves coming up in the state and may table an alternative location for the Indian Strategic Petroleum Reserves Ltd (ISPRL) to consider.

ISPRL is a special purpose vehicle, whose equity is held by the Oil Industry Development Board (OIDB). Earlier, it was owned by Indian Oil, which later transferred its equity share to the SPV. Indian Oil has set up the SPV with a capital base of Rs 1 crore in June 2004.