‘India’s reserves built at $17 per barrel, global average is $23’

India will soon have the capacity to store crude oil in underground caverns that it can dip into to meet 90 days of requirements in case of an emergency. “We currently have built capacity that can store about 9-9.5 days of crude oil requirements. The oil marketing companies have about 65 days of crude storage. After completing the second phase of strategic petroleum reserves (SPRs), we will add another 12 days of crude storage capacity, which shall bring the total crude reserves to about 86-87 days (of requirement),” HPS Ahuja, CEO and MD, Indian Strategic Petroleum Reserves Limited (ISPRL) said in an exclusive interview with Firstpost. As of now, there are about 20 million barrels of crude stored in three SPRs in Visakhapatnam (Andhra Pradesh) and Manguluru and Padur (Karnataka). These three ISPRL-constructed SPRs have a combined storage capacity of total 5.33 million tonnes (MT), which is around 39 million barrels. Padur is the biggest among the three with a capacity of 2.5 MT, followed by Mangaluru (1.5 MT) and Vishakhapatnam (1.33 MT). [caption id=“attachment_6095351” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] ISPRL has built these three SPRs within seven years, meeting the global gestation period, at an estimated `4,000 crore. “The global average cost for SPRs is $23 barrel. We have built it at about $17 a barrel. Labour costs are lower here.” In the second phase, India plans to build an additional 6.5 MT facilities at Chandikhol, Odisha, and Padur, with a capacity to store another 11.5-12 days’ crude needs. “Assuming we start work on these later this year, the facilities should be commissioned by 2025 given the usual gestation of six to seven years for such projects,” Ahuja said. It has allowed foreign oil companies to stock oil in the storages on the condition that the government will get the first right to use the reserves in case of an emergency or supply disruptions. Abu Dhabi National Oil Company (ADNOC) will fill up part of the SPRs in Mangaluru and Padur. State-owned Hindustan Petroleum Corporation Limited, which has borne part of the cost for building this facility, uses a third of the Visakhapatnam facility to store crude used in its refineries across the country. The government has stored crude in the remaining part of this facility, Ahuja said. Likewise, the government and ADNOC have started stockpiling crude oil in the Mangaluru facility. The Padur SPR has four compartments of 0.625 million tonnes each and ADNOC will use a part of this facility also (apart from Mangaluru) to stock oil, Ahuja added. “We are yet to take a view (on whether to allow foreign companies to stock oil) on the fourth compartment in Padur.” Ahuja also disagreed with the view that electricity will eventually be the primary source of energy for vehicles in the next decade, negating the need to build too many SPRs. “I don’t see that happening in the near future in India. This requires big infrastructure development such as charging stations. This will take some time,” he said.