Aramco keen on JV with IOC

Plans to set up 5 mn tonne crude reserves at Visakhapatnam, Mangalore

Saudi Aramco is keen to partner Indian Oil Corporation (IOC) for creation and maintenance of strategic crude reserves, Petroleum Minister Mani Shankar Aiyar told the Rajya Sabha today.

India is planning to build 5 million tonne crude oil storage facility in Visakhapatnam and Mangalore to improve its energy security. The capital cost of building the storage facilities is estimated at Rs 1,650 crore, while the crude inventory could cost Rs 6,000 crore depending on the prevailing crude oil rates.

"At a recent meeting between IOC and Saudi Aramco, the latter had expressed interest in joining India's efforts towards maintenance of strategic petroleum reserves. However, no formal proposal has been received from Saudi Aramco in this regard," Aiyar said in a written reply.

The storage, equivalent to 15 days' oil consumption, will boost India's existing 7.3 mt crude tankage and 6.8 mt product tankage capacity. Total crude oil storage currently can meet the oil requirement for 19 days.

The minister told the House that India imported about 70 per cent of its crude requirements. Of this, roughly 67 per cent comes from the volatile Gulf region.

Replying to another question, Aiyar said indigenous production of crude oil during 2003-04 was 33.37 mt against the requirement of 118.68 mt.

Given the increasing gap between demand and domestic availability of crude oil, it was essential to step up efforts in search of equity oil and supplementary sources of oil and gas, the minister said. India was also taking steps to accelerate exploratory activities for enhancing domestic production, he added.

ONGC Videsh Ltd (OVL) has been pursuing the acquisition of equity oil abroad, as well as that of oil and gas exploration acreages and production properties.

It has participating interests in oil and gas projects in Vietnam, Sudan, Russia, Iraq, Iran, Myanmar, Libya, Syria, Australia and Ivory Coast.

"OVL, in association with other oil sector PSUs, is aggressively scouting for opportunities in countries such as Kazakhstan, Kuwait, Yemen, Qatar, Angola, Cuba, Sierra Leone, Bangladesh and Ecuador in addition to efforts to acquire more E&P assets in the countries where it is operating currently," he said.

Negotiations have also started with Iran for the supply of natural gas by pipeline through Pakistan. A trilateral ministerial meeting in Yangon in January, 2005, agreed in principle on the import of gas from Myanmar to India through Bangladesh, Aiyar added.

Shoring up

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• The storage facilities will cost Rs 1,650 crore
• Its capacity will be equivalent to 15 days' consumption
• It will boost India's existing 7.3 mt crude tankage and 6.8 mt product tankage capacity
• Current crude oil storage can meet India's oil requirement for 19 days