The government has received interest from global energy players such as Trafigura, BP, Vitol, Glencore and Shell to partner in its plans to expand and commercialise the strategic petroleum reserves (SPRs) under the private-public partnership (PPP) mode.

This assumes significance as the government in February this year allowed land acquisition for expanding the Mangalore SPR, in which one portion has already been leased to the Abu Dhabi National Oil Company (ADNOC).

“During two road shows conducted, global trading companies like Trafigura, BP, Petrochina, GASP, Vopak, Geostock, Monnet, Hyundai, Gulf Energy, Natixis, Vitol, Glencore, DBS, IC-Group, ANU Resources, Shell, Parson Brinkerhoff, SKANSKA, etc, evinced interest in participating in Phase II SPR project,” Minister of State for Petroleum & Natural Gas Rameswar Teli told Lok Sabha in a written response on Thursday.

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The facility will be government owned and the concessionaire will transfer the SPR along with Single Mooring Point (SMP), onshore and offshore pipeline to the government of India, at the end of the 60 years of the concession period, he added.

Expansions

The Ministry of Petroleum & Natural Gas (MoPNG) said in February this year, the Delegated Investment Board (DIB) approved its proposal to acquire 154.90 acres by ISPRL from Mangalore Special Economic Zone for construction of additional crude oil storage capacity of 1.5-2 million tonnes (MT).

The Mangalore facility, which was commissioned in October 2016, has two caverns of 750,000 tonnes each and is spread over more than 100 acres. One cavern is leased to ADNOC.

Strategic reserves

Presently, the estimated reserves of crude oil, and petroleum products in India, stored by private and public companies, including those created under Phase-I of SPR programme is 74 days of national net imports.

ISPRL established crude storage facilities with a capacity of 5.33 MT at – Visakhapatnam (1.33 MT), Mangalore (1.5 MT) and Padur (2.5 MT) – under Phase I of the programme, which equals around 38 million barrels and can serve India’s crude demand for 9.5 days.

Under Phase II, the government in July 2021 approved establishing two additional commercial-cum-strategic reserves with a capacity of 6.5 MT at Chandikhol (4 MT) and Padur (2.5 MT) under the PPP mode. These reserves will meet 12 days of India’s crude requirement.

Commercial Viability

In October 2020, to enhance the commercial viability of ISPRL SPRs, the MoPNG modified its ADNOC model.

The new model allowed the caverns to be offered to ADNOC Marketing International (India), or AMI India, on a 50:50 basis, which means 50 per cent for strategic use and 50 per cent for commercial. This arrangement was earlier in the ratio of 65 per cent strategic and 35 per cent commercial. ADNOC and ISPRL inked the new agreement in February 2022.

Strategic storage is for meeting emergencies such as supply disruptions due to natural disasters or geopolitical factors.

Besides, it also allowed permitting coastal movements of crude oil from and to SPRs through foreign flag vessels and permission to re-export the crude stored in Mangalore cavern to other countries during the contract period.

In July 2021, the government allowed ISPRL to lease or rent 30 per cent of overall oil storage capacity of caverns to Indian or foreign companies with the conditions that in case of any exigency, India will have the first right on the entire crude oil storage in caverns.

It also allowed sale or purchase of crude up to 20 per cent of overall oil storage in caverns to Indian firms. ISPRL started releasing crude to state-run HPCL and MRPL from August 2021.

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