India, which is 79 per cent dependent on imports to meet its crude oil needs, is building underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tonnes of crude oil to guard against crude price shocks and supply disruptions.
"The national oil companies of UAE and Kuwait, namely, Abu Dhabi National Oil Company (ADNOC) and KPC have expressed their interest (to store about 2 million tons of crude oil in the caverns)," he said in a written reply to a question in Rajya Sabha here.
Official sources said the 1.33 million tonnes storage at Visakhapatnam would be ready by September/October while the 1.5 million tonnes Mangalore facility and 2.5 million tonnes unit at Padur would be completed by mid-2015.
Visakhapatnam facility would have the capacity to store 1.33 million tonnes of crude oil in underground rock caverns. Huge underground cavities, almost ten storey tall and approximately 3.3 km long are being built.
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With the commissioning of Visakhapatnam storage, India will join nations like the US, Japan and China that 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, construction got delayed.
The Cabinet had in January 2006 approved the building of the strategic crude oil storages at a cost of Rs 2,397 crore but due to cost and time overrun the capital required is now estimated at Rs 3,958 crore.
The Visakhapatnam facility will cost Rs 1,038 crore, Mangalore Rs 1,227 crore and Padur Rs 1,693 crore.