After dropping a Rs.5,000 crore plan to fill parts of strategic oil storages, the Government of India will lease out space in the underground rock caverns to domestic and international firms to store oil, a top executive affirmed on Tuesday.
The rock caverns are considered to be the safest means of storing hydrocarbon, to domestic and international firms to store oil, which it had earlier planned to fill as part of it’s strategic petroleum reserve.
In the Union Budget 2023-24, the Government announced a plan to procure crude oil wort 50 billion rupees($601.78 million) for caverns in the southern cities of Mangalore and Vishakhapatnam, but keeping in mind the emerging treads in the global oil markets, the finance ministry reiterated in January 2024, that India has deferred the plan to fill parts of it’s strategic petroleum reserve.
The storages have been built at three locations in Southern India, Vishakhapatnam in Andhra Pradesh, Mangalore, and Karnataka’s Padur, to store 5.33 million tonnes of oil that can be used in any emergency situation like supply disruption or war.
UAE’s Abu Dhabi National Oil Company (Adnoc) has already hired half of the 2.5 million tonnes storage capacity at Padur and 1.5 million tonnes facility at Mangalore.
While the remaining 1.25 million tonnes at Padur has been filled by ISPRL, 0.75 million tonnes of vacant storage at Mangalore will be leased out, ISPRL CEO and Managing Director LR Jain told reporters on the sidelines of India Energy Week.
Out of the 1,33 million tonnes of storage built at Visakhapatnam, 0.33 million tonnes was a space that was built for the Hindustan Petroleum Corporation Ltd (HPCL). Of the remaining, HPCL has hired 0.3 million tonnes more and the rest of the storage will be leased out, he said.
“We will shortly be floating an expression of interest for leasing out of the storages”, he further added.
The government in the 2023-24 Budget provided Rs.5,000 crore for filling the vacant slots in the caverns, but by the mid-year that plan was deferred.
In the interim budget 2024-25 presented in Lok Sabha last week, no allocation has been made for this purpose.
Jain also said companies like Adnoc can store oil in the storage but India will have the first right to use the oil. Land acquisition, would be done for the second phase of storage, he added.
India, the world’s third biggest oil importer and consumer, imports more than 85 per cent of it’s oil needs and is looking to expand the strategic storage to protect against supply disruptions.
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