New Delhi, Oct. 16: Geological problems have delayed the country’s first underground oil storage facility in Visakhapatnam.
Though a smaller facility of 0.3 million tonnes capacity will be ready on time, the main one of 1 million tonnes has been delayed by more than a year.
“There are some issues that we faced while building the underground cavern at Visakhapatnam. While a smaller compartment of 0.3 million tonnes will be commissioned according to schedule in March 2013, the bigger 1-million-tonne cavern will be commissioned only a year later,” Rajan K. Pillai, CEO of Indian Strategic Petroleum Reserves Ltd, the company building the facilities, said at an oil conference here.
In fact, the 1.33-million-tonne facility, costing Rs 1,038 crore, was supposed to be ready by this month.
Besides Visakhapatnam, Indian Strategic Petroleum is building facilities in Mangalore and at Padur, which is in Kerala.
These emergency facilities are meant to cushion the country against supply disruption and price fluctuations.
In all, storage space for 5.33 million tonnes, or about a fortnight of the country’s oil requirements, were to be in place by April 2014. However, the Visakhapatnam facility is already delayed.
At present, the three oil PSUs — BPCL, IOC and HPCL — hold stocks of 3-3.5 million tonnes. India imports about 80 per cent of its crude requirements,
Pillai said HPCL would keep oil for its Visakhapatnam refinery at the smaller facility.
The Rs 732-crore Mangalore storage (1.5 million tonnes) will be completed by December 2013.
The third storage at Padur, with a capacity to stock 2.5 million tonnes to be built at a cost of Rs 993 crore, will be ready by April 2014.
Countries such as the US, Japan and China use stockpiles not only as insurance against supply disruptions but also to buy and store oil when prices peak and ebb.
India and China could collaborate in oil and gas exploration in a third nation, a senior oil official from China said today.
“India and China can and do work together on oil and gas exploration overseas ...they can work together outside their countries instead of competing against each other,” Bo Qiliang, vice-president of China National Petroleum Corporation, a subsidiary of PetroChina, said.