India to build 1st commercial crude oil strategic reserve
New Delhi, April 3
India, the world’s third biggest oil consumer and importer, plans to build its first commercial crude oil strategic storage as part of efforts to shore up stockpiles as insurance against any supply disruption.
Project allotment
- Bidders have been asked to quote the financial grant they require for the building of the reserves or the premium/fee they want to offer to the authority
- The project will be awarded to entities that offer the highest premium. Where no bidder is offering a premium, it would go to the one seeking the lowest grant, the tender document said
Indian Strategic Petroleum Reserves Ltd (ISPRL), a special purpose vehicle created by the government for building and operating strategic petroleum reserves in the country, has invited bids for constructing 2.5 million tonnes of underground storage at Padur in Karnataka, according to the tender document. The ISPRL had in the first phase built a strategic petroleum reserve in underground unlined rock caverns for storage of 5.33 million tonnes of crude oil at three locations — Visakhapatnam (1.33 million tonnes) in Andhra Pradesh, and Mangalore (1.5 million tonnes) and Padur (2.5 million tonnes) in Karnataka.
Under Phase-II, it intends to build a commercial-cum strategic-petroleum reserve in underground unlined rock caverns along with associated above ground facilities, including dedicated single-point mooring and associated pipelines (offshore and onshore) for storage of 2.5 million tonnes of crude oil at Padur-II at a cost of Rs 5,514 crore.
The Phase-I storages were built at government expense.
In the tender, the ISPRL said the Padur-II will be constructed in a PPP (public-private partnership) model where private parties will design, build, finance, and operate the storage.
“Maximum quantum of grant to be quoted for the project shall be capped to Rs 3,308 crore,” the ISPRL said. “A bidder who seeks a grant cannot offer any premium.”
The operator of Padur-II will lease out the storage to any oil company wishing to store oil and charge a fee. The companies storing oil can sell it to domestic refiners. But in case of an emergency, India will hold the first right on oil usage. Bids are due by April 22 and the tender is to be awarded by June 27, the document said. The ISPRL is acquiring about 215 acres of land for Padur-II. India, which meets over 85 per cent of its oil needs through imports, will use the strategic reserves in any emergency situation like supply disruption or war.
Of the Phase-I reserves, UAE’s Abu Dhabi National Oil Company (Adnoc) has 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 filed by the ISPRL, the 0.75 million tonnes of vacant storage at Mangalore is to be leased out.
Out of the 1.33 million tonnes of storage built at Visakhapatnam, 0.33 million tonnes was a space that was built at the expense and for Hindustan Petroleum Corporation Ltd (HPCL). Of the remaining, HPCL has hired 0.3 million tonnes more and the rest of the storage is to be leased out.
