In order to reduce its dependence on the Persian Gulf for the supply of crude, the government is planning to import and float at least 15 days' inventories for public sector refineries by hiring very large crude carriers.
Fifteen days of crude requirement of public sector refineries works out to around 2 million tonnes.
The government is planning to import crude from regions outside the Persian Gulf for floating the inventories.
It may enter into contracts with oil exporting countries like Norway, Nigeria, Angola, Egypt, Venezuela, Yemen, Oman, Russia and Malaysia.
As per the estimates made by Indian Oil Corporation (IOC), inventory carrying costs will come to Rs 25 crore a month, floatation costs will be Rs 40 crore a month, and costs due to inferior yields and higher freight will be Rs 225 crore.
IOC has said the costs of holding such inventories, including the interest on capital blocked for this purpose, demurrage and other incremental costs incurred, should be reimbursed by the government "as these companies are carrying inventories and taking other measures to ensure the supply of crude to the country".
The crude refining capacity in the country is around 115 million tonnes per annum (mmtpa). However, domestic crude production is in only 30 mmtpa. The shortfall of about 85 mmtpa has to be, therefore, met through imports.
Public sector oil companies account for about 47 mmtpa of the crude imported, while private sector companies account for 38 mmtpa.
Crude is mostly imported from West Asia, which accounts for about 60 per cent of India's crude imports. The balance comes from countries like Malaysia, Nigeria, Venezuela, Mexico and Egypt.
