Hindustan Petroleum Corporation (HPCL) has sought capacity in India's first strategic crude oil storage being built on the east, as an insurance against 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 tonnes of crude oil. This is enough to meet nation's oil requirement of 13-14 days.
HPCL has submitted a proposal to Indian Strategic Petroleum Reserve, which is building the strategic stockpile, for utilising 0.3 million tonnes capacity of the 1.33 million tonnes crude cavern project at Visakhapatnam at a proportionate cost of Rs 230 crore, official sources said.
Besides HPCL, Mangalore Refinery and Petrochemicals Ltd (MRPL) too has sought 0.3 million tonnes capacity of 1.55 million tonnes Mangalore cavern.
Both proposals involve sharing cost in a proportionate manner with ISPRL for the caverns, they said.
HPCL operates refinery at Visakhapatnam while MRPL too has a unit at Mangalore.
The over 5 million tonnes strategic storage facility was being built at an estimated cost of Rs 3,000 crore. The carven at Visakhapatnam is to be completed by October 2011 while a similar facility in Mangalore would be mechanically completed by November 2012. A 2.5 million tonnes storage at Padur, near Mangalore, would be completed by December 2012.
Sources said besides sharing costs, HPCL has proposed joint control and operation of the cavern.
HPCL and ISPRL are likely to ink an operational agreement to address issues such as type of crude oil that could be stored at the cavern, frequency of crude imports and evacuation need of HPCL for processing crude at Visakh Refinery.
A somewhat similar arrangement is also expected to be worked out with MRPL, they said.
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 tonnes to cover for 45 days requirement but no decision has been taken as yet.
ISPRL is a wholly-owned subsidiary of Oil Industry Development Board (OIDB), a government body that lends money to energy projects.
