Petroleum minister Dharmendra Pradhan said some trading companies apart from the companies mentioned above have also evinced interest to participate in the strategic reserve programme.
At a time when oil majors such as the UAE’s Abu Dhabi National Oil Company and Saudi Arabia national oil company Saudi Aramco have shown interest to participate in India’s strategic petroleum reserves programme, the Indian Strategic Petroleum Reserves (ISPRL) on Wednesday launched the second phase of the programme through a road show here.
Petroleum minister Dharmendra Pradhan said some trading companies apart from the companies mentioned above have also evinced interest to participate in the strategic reserve programme. Two more road shows will also be held in London and Singapore soon to take feedback from investors before floating bids for these reserves which will be offered through public-private-partnership (PPP).
Created in June, 2004, ISPRL is a special purpose vehicle wholly owned by the Oil Industry Development Board under the ministry of petroleum and natural gas and has been assigned to develop and maintain underground caverns to store crude oil to mitigate shortages during supply disruptions.
In the first phase, India has built a strategic reserve capacity of 5.3 million tonne (MT) across three locations — Vishakhapatnam (1.33 MT), Mangaluru (1.5 MT) and Padur (2.5 MT) — at a cost of R4,098 crore. ISRPL is now looking to develop two more caverns—a second one at Padur and another at Chandikhol—with a combined storage capacity of 6.5 MT at a cost off R11,000 crore.
Once completed, the country will have crude oil storage capacity to last for 87 days. While the refiners keep a stock to last for around 65 days, the first phase added storage capacity for 10 days and another 12 days’ capacity will be created upon completion of the second phase.
Adnoc has already stored 2 million barrels at the Mangaluru reserve (one-third of its capacity). Under the PPP model, ISPRL is looking for investors who will design, build, finance, operate and transfer these caverns. The investor will have the right to stock crude oil and the government will have the first right to refusal in times of exigencies. However in return, the investor will access to the Indian refining market.
Speaking at the launch of the road show, ISPRL’s CEO and MD HPS Ahuja said that these caverns will help refiners to expand their refineries as they will not have to store inventory and can use these caverns as storage sites. Earlier in the day, secretary general of OPEC Mohammad Barkindo held a discussion with Pradhan and other top officials and said OPEC is concerned about the stability of markets to look into the interest of common citizens of the world. “We are facing headwinds in the global economy and demand in our industry,” he said referring to the current high crude oil prices and uncertainty around US sanctions on Iran.