Action Plans Ready To Ensure Crude Supplies

New Delhi, December 23: | Updated: Dec 24 2002, 05:30am hrs
The government has drawn up two action plans for ensuring adequate crude oil supplies to refineries in the event of any attack on Iraq led by the United States.

While the first plan deals with the impact of military action being limited to Iraq only, the second plan has been worked out in anticipation of the military action spreading to Arab Gulf, leading to disruption of exports from the Persian Gulf region.

Indias dependence of crude oil is high on the Middle East, particularly the Arab Gulf. This is evident from the fact that during 2001-02, out of the total crude oil imports of 78.64 million tonne, 68 per cent of the total imports (53.43 million tonne) came from the Gulf region.

Giving details, senior government officials said that if supplies from Iraq alone are disrupted then this may not affect much the overall availability of oil in international oil market. The overall global availability of oil would reduce by only three per cent. Under this scenario, physical availability of oil from other countries in the Gulf, Middle East and outside the Middle East would be ensured, though the prices in all probability would go up substantially, they added.

Under the second scenario, i.e., in the event of closure of the Arab Gulf due to war, crude oil supplies to Indian refineries would be badly affected. India would then make diplomatic efforts with the governments of oil exporting countries outside the Gulf region including Egypt, Yemen, Nigeria, Russia, Malaysia, Norway, Angola, Venezeula, Oman and Australia, for supply of appropriate grades of crude oil during the troubled period, officials said.

Alongside, the refineries would explore alternatives of crude oil imports including spot purchases from sources outside the Gulf region, they said.

However, officials said that as this situation would not be unique to India only and would affect almost the entire world including major oil import dependent developed countries like Japan, the United States, France, Germany and Italy, so it is likely that the reasons for closure of Arab Gulf would be addressed very quickly and appropriate action would be taken to restart oil exports from region.

The demand of petroleum products would be met from product storage capacities available in the country. Official figures on the available tankage of petroleum products reveal that presently the country has a 33 days inventory for petrol, 29 days for diesel, 32 days for kerosene, 47 for aviation turbine fuel (ATF) and 15 days for LPG (cooking gas).

The total crude oil storage capacity with domestic refineries is 5.7 million metric tonnes, which works out to about 19 days of cover on an aggregate basis.

While an action plan has been worked out to deal with any eventualities, the government is also working on a plan to build up strategic oil storage in the country. This will help in partially containing the impact of very extreme price volatilities in the international oil market over a short period.

Detailed feasibility studies have been carried out by the governments consultants, Engineers India Limited (EIL), for storing five million tonnes of strategic crude oil storage. This would be equivalent to 15 days of domestic refining capacity.