Government approves revised cost and capacity of strategic crude oil storage

The government has approved a 33 per cent increase in the storage capacity of the strategic crude oil reserve at Visakhapatnam as also a 54 per cent increase in the project cost.

The Cabinet Committee on Economic Affairs (CCEA), which approved the enhancement of the cavern capacity to 1.33 million metric tonnes, from the earlier proposed 1 million metric tonnes, also approved a revised utilisation plan for the crude stockpile.

The project cost for the 1.33 MMT storage facility will go up by 54 per cent to Rs1,038 crore from the earlier estimate of Rs671.83 crore, for the 1 MMT cavern.

However, the increased cost of the oil storage will be shared under a new utilisation plan. Hindustan Petroleum Corporation Limited (HPCL) will share 0.30 MMT of the crude stock on a proportional cost sharing basis, under the revised utilisation plan.

The enhanced storage capacity at Visakhapatnam will enable larger strategic storage of crude oil at a lower cost due to cost sharing while providing operating flexibility and cost savings to HPCL, an official press release stated.

The strategic crude oil storage is being built as insurance against supply disruptions.

India, which imports over 70 per cent of its crude oil requirements, is building underground storages at Mangalore and Padur in Karnataka as well to store a total of about 5.33 million tonnes of crude oil. This will be enough to meet the country's oil requirement of 13-14 days.