The Hindu : Business : Strategic crude oil storage project set to take off

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Thursday, Jul 12, 2007
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Strategic crude oil storage project set to take off

Sujay Mehdudia

Three locations identified for the project

NEW DELHI: The Central Government, with a view to achieving energy security, is going ahead with its grand plans to build ‘Strategic crude oil storages’ of five million tonnes at three sites — Mangalore, Vizag and another location around Mangalore township — in the current financial year.

Sources said the Government had given in principle approval to the proposal of the Petroleum and Natural Gas Ministry for setting up the strategic reserves, being the core critical sovereign reserve, estimated to cost about Rs. 11,267 crore.

The Petroleum Minister, Murli Deora, was keen on implementing the project that aimed to put in place reserves of crude oil at various locations during the XI Plan to prevent the nation from any ‘oil shocks’ in the future.

The Expenditure Finance Committee of the Finance Ministry has already approved the project. The capital cost of the three storages is estimated at Rs. 2,397 crore. The cost of filling up crude is estimated to be around Rs. 10,000 crore, which would be met through utilisation of existing legal and fiscal measures. The capital cost that will be required during the first five years would be met from the existing funds available with the Oil Industry Development Board (OIDB).

The special purpose vehicle — Indian Strategic Petroleum Reserve Limited (ISPRL), which is now a subsidiary of the Indian Oil Corporation Limited (IOCL) — will be made subsidiary of the OIDB for implementation and management of strategic crude oil storages by way of transfer of ISPRL equity held by IOC to OIDB.

The sources said the Government was in the process of finalising bid documents, tendering, awarding of contracts for detailed engineering and construction of the strategic storage for crude oil and petroleum products under a stipulated time regime.

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