India’s push to build more strategic petroleum reserves is moving, but slowly, BusinessLine reports. Under Phase 2, the country is adding 6.5mn tonnes of storage at Chandikhol in Odisha and Padur in Karnataka. Chandikhol will hold 4mn tonnes and Padur 2.5mn tonnes.
Strategic petroleum reserves Phase 2 progress
Chandikhol is now “gradually inching ahead”, sources told the paper. Officials are discussing certain commercial terms with ADNOC. So far, the project has received about 400 acres of land, after nearly 8 years of delay.
In addition, ONGC is building a 1.75mn-tonne reserve at Mangalore. Bina in Madhya Pradesh and Bikaner in Rajasthan are also under study for crude, LNG and LPG storage. Overseas, India signed a storage pact with the UAE in May and is in talks with Japan.
Why speed matters
Phase 2 costs around INR150bn ($1.6bn), said Manas Majumdar of PwC India. The public-private model brings in Megha Engineering and ADNOC, with government gap funding of close to 60%. However, he said the work is too slow and must speed up.
His reasoning is simple, though. India’s crude import bill was about $150bn last year. Since then, the Indian basket has climbed from about $90 to over $110 a barrel. That is a rise of more than 20%. That could add $20bn to $30bn to the bill. Stored crude, bought earlier, would have cost far less.
For the latest import figures, see India’s crude import bill.
For a deeper analysis, read: India’s Strategic Petroleum Reserves: 9.5 Days on Paper, About 4.5 Days in the Caverns
