India’s emergency oil stockpile storage which is supposed to be used as a safeguard against disruptions in or supplies or serious price fluctuations will be delayed due to ‘unexpected geological surprises’ that were encountered in construction of these underground taverns.
The first of the 5.33 million tonne of storages at Visakhapatnam, Mangalore and Padur were to be built by 2013 for underground oil storage. India is looking to build storage taverns for a total of 12.5 mt of crude oil in the next 5 years.
The 1.33 mt strategic storage under construction at Visakhapatnam was to be completed this month at an estimated cost of `1,038 crore.
While China has already completed and filled 103 million barrels of storage in the first phase of a similar storage plan. It is now working on a second phase of 169 million barrels of storage by 2013 and by 2016 will build a final phase of 228 million barrels of storage.
“There are some issues we faced to build the underground cavern at Visakhapatnam. While a smaller compartment with 0.3 mt will be commissioned as per schedule in March 2013 the bigger one million tonne cavern would be commissioned only a year later, Rajan K Pillai, CEO of Indian Strategic Petroleum Reserves (ISPRL), the firm building the strategic storages said at the ongoing Petrotech 2012 meet.
ISPRL, a subsidiary of Oil India Development Board (OIDB) is a special purpose vehicle that is building the storage facility for country’s strategic stockpile.
The `732 crore 1.5 million tonne Mangalore storage would be completed by December 2013. The third storage at Padur with a capacity to stock 2.5 million tonne of crude oil and cost `993 crore is expected to be commissioned by April 2014.
Pillai said studies have been initiated to construct space to store an additional 12.5 mt of strategic reserves.
Additional storage of 5 mt was being considered at Padur in Karnataka and 2.5 mt each at Chandikhol in Odisha, Rajkot in Gujarat and Bikaner in Rajasthan.
Strategic crude oil reserves are meant to take care of oil security concerns of the country and could be released to meet contingencies arising out of supply disruptions and cushion abnormal increase in prices, oil ministry officials said.
An inter-ministerial empowered committee chaired by oil secretary will decide on releasing emergency stocks, they said adding that the panel would include secretaries to the Department of Expenditure, Secretary Home, Plan panel, Defence, National Security Council and Shipping.