The Hindu Business Line : Plan to raise oil storage capacity by 5 mt

THE PETROLEUM SECRETARY, Mr M.S. Srinivasan (left), with the CII Principal Advisor, Mr V. Raghuraman, at a lecture series "Emerging issues in the hydrocarbon sector", in the Capital on Friday. — Ramesh Sharma

New Delhi , Jan 5

The Petroleum Secretary, Mr M.S. Srinivasan, said here today that while construction on the five million tonnes strategic oil storage facility is expected to begin by April, the Ministry is examining the prospects of building additional reserve facility of the same size in partnership with the private sector.

``We are considering adding another 5 million tonnes of strategic petroleum reserves,'' he said.

The additional capacity will be established through public-private partnerships, Mr Srinivasan said.

A feasibility report has been prepared for the purpose.

On the construction of five million tonnes storage facility, he said that plans are to advance the timeline for building the first lot to 36 months from 48 months previously.

``We are poised to complete the work in 36 months from April 1 (2007)'' he added.

The strategic reserves, to be stored in three locations at two port sites on the East and West coasts, will hold oil to meet the demand for 15 days.

The three reserves will be built at Mangalore with a capacity to store 1.5 million tonnes, Visakhapatnam (1 million tonne) and another location near Mangalore with a capacity of 2.5 million tonnes.

Three reserves

The actual cost of filling up the strategic crude oil storage would be based on the then prevailing international prices of crude.

It is estimated that setting up a 5 million tonnes reserve will cost around Rs 11,267 crore over nine years, including the cost of imported crude.

Considering the dependency on imports for over 70 per cent oil requirements, the Government has decided to set up strategic oil storage in three different locations to protect consumers against supply disruptions.

Free flow of funds, tech

Addressing a CII gathering on `Emerging issues in the hydrocarbons sector', he said, rather than restricting the sector for the national oil companies alone, his Ministry was in favour of opening up the sector and inviting private and foreign investment.

"Unless investment and technology can flow freely, the resource utilisation will remain sub-optimal," he said.

Talking about the cost cutting measures without impairing efficiencies, the Secretary said, ``There is tremendous scope for cost-cutting in public sector oil companies."

He also said that the public sector companies should benchmark themselves against global majors in operational parameters and technology.

Talks with ONGC

``We are in dialogue with ONGC and have asked them to have a re-look at the terms offered to private and foreign companies for bringing marginal fields on production so as to attract more technology strong companies,'' he said.

The Secretary reiterated that ONGC should focus on its core upstream business and operating it in more efficient and effective manner.

The Petroleum Ministry has sought infrastructure status for oil and gas exploration business and pipelines to encourage prospecting in unexplored basins.

``Only 31 per cent of India's sedimentary basins have been explored till date. We have set an ambitious target of reaching 60 per cent by the end of 11th Plan Period (2012),'' Mr Srinivasan said.

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