India’s Strategic Petroleum Reserves

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Indian Strategic Petroleum Reserves Limited

India’s SPR is managed by the State-controlled Indian Strategic Petroleum Reserves Limited (ISPRL), which was set up in 2004 as a wholly owned subsidiary of Indian Oil and then handed over to Oil Industry Development Board (OIDB) in 2006. Indian Strategic Petroleum Reserves Limited (ISPRL) is a wholly owned subsidiary of OIDB. ISPRL is a Special Purpose Vehicle for setting up 5.33 million metric tons (MMT) of strategic crude oil storages at three locations namely, Visakhapatnam, Mangalore and Padur (near Udupi). These strategic storages would be an addition to the existing storages of crude oil and petroleum products of oil companies and would serve as a cushion in response to external supply disruptions. The approved equity contribution of OIDB in ISPRL is Rs.3832.56 Crore. 

Under Phase I, ISPRL established petroleum storage facilities with the total capacity of 5.33 million tons (MT) at 3 locations: (I) Vishakhapatnam (1.33 MT), (II) Mangalore (1.5 MT) and (III) Padur (2.5 MT), all of which have been filled with crude oil. This will be sufficient to meet nine and a half days of India’s crude requirement. In July 2021, the government approved of the establishment of two additional commercial-cum strategic facilities with a total storage capacity of 6.5 MT [underground storages at Chandikhol (4 MT) and Padur (2.5 MT)] under public private partnership (PPP) mode in phase II of the SPR programme. When phase II is completed, it will meet an additional 12 days of India’s crude requirement.

As it was mentioned before , in order to ensure energy security, the Government of India decided to set up 5 million metric tons (MMT) of strategic crude oil storages at the three locationsof Visakhapatnam, Mangalore and Padur (near Udupi). The construction of the Strategic Crude Oil Storage facilities is being managed by Indian Strategic Petroleum Reserves Limited (ISPRL), a Special Purpose Vehicle, which is a wholly owned subsidiary of Oil Industry Development Board (OIDB) under the Ministry of Petroleum & Natural Gas. Engineers India Limited (EIL) worked as the Project Management Consultant for the three locations.

The crude oil storages are constructed in underground rock caverns and are located on the East and West coast of India. Crude oil from these caverns can be supplied to the Indian Refineries either through pipelines or through a combination of pipelines and coastal movement. Underground rock caverns are considered as the safest means of storing hydrocarbons. The estimated cost of the project was Rs.2,837 Crore based on September 2005 prices. This excluded the cost of filling the crude oil in the caverns. Approval of the Union Cabinet was obtained to enhance the capacity at Visakhapatnam to 1.33 MMT and to permit utilization of the additional 0.3 MMT compartment by Hindustan Petroleum Corporation Limited (HPCL) on proportionate cost sharing basis. By spending just 15% extra we could get 30% additional capacity which was very economical. As a result of this approval, the strategic storage capacity was enhanced to 5.03 MMT.

The approved Revised Cost Estimates for Visakhapatnam, Mangalore and Padur are Rs.1178.35, Rs.1227 Cand Rs.1693 Crores respectively. The total cost of all the three projects is Rs.4098.35 Crore, out of which Rs.265.79 Crore is borne by HPCL as proportionate cost for the 0.3 MMT compartment at Visakhapatnam.

SPRL operates the storage facilities as custodian of core critical sovereign crude oil reserves apart from operating the facilities as custodian of crude oil for any other entity that the Government decides. It shall also coordinate the release and replenishment of strategic crude oil stock during supply disruptions through an Empowered Committee of the Government of India. All the three locations viz. Visakhapatnam (June 2015), Mangalore (October 2016) and Padur (December 2018) have been commissioned. At Visakhapatnam, HPCL is utilizing the 0.3 MMT compartment for its day-to-day refinery operations. Padur facility was commissioned on 15.12.2018. As on 31.03.2021, the authorized capital was Rs.3832.56 Crore and paid up & subscribed capital of the company was Rs.3775.87 Crore. Two new SPR’s are proposed to be constructed at Chandikhol (Odisha) and Padur (Karnataka) under Phase II.

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