Oil storage: Govt to offer space

NEW DELHI: The government is working out a plan to offer space in the upcoming underground oil storage facilities to global crude suppliers with the aim of spreading investment risks of building and maintaining a buffer stock of crude, also known as ���strategic oil storage'.
A discussion paper prepared by state-run Engineers India Ltd, which is providing consultancy for the project, says a capacity of a million tonnes or more can be offered to crude suppliers who may also become investment partners.The paper suggests levying a user fee and a turnover charge on entities taking space in the storage.
The plan is being chalked out with West Asian national oil companies and others who are major suppliers of crude to Asia and the Far East. Sources said several such suppliers have responded positively when they were sounded out by the Indian establishment but admittedly the details remain to be worked out.
India itself is a major importer of West Asian oil and its geographic location mid-way along the transit route to the Far East gives the rent-a-storage plan an edge. An Indian storage will bring the suppliers closer to the oil-deficit Far East as supplies can be rushed quickly in times of sudden disruption or demand increase.
For India, the plan will reduce its investment risks and operational costs of the strategic storage, while keeping a buffer stock ready for any emergency. It will also create a stake for suppliers to ensure an uninterrupted flow of oil to India. Indian Strategic Petroleum Reserves Ltd, an SPV of government's Oil Industry Development Board, is building facilities to store five million tonnes of crude in underground rock caverns at Mangalore, Vizag and Padur.