Strategic Petroleum Reserve capacity lease
India to lease petroleum storage capacity after change in policy: Report
New Delhi/IBNS: The government has decided to lease its federal storage capacity and started selling oil from its Strategic Petroleum Reserve (SPR) to state-run refiners to free up space for the purpose, according to media reports.
The decision to commercialise oil storage capacity follows a change in the policy to allow the Indian Strategic Petroleum Reserves Ltd (ISPRL), which manages the country's oil inventories, to lease 30 per cent of its overall 37 million barrels capacity to Indian and foreign companies, according to a Reuters report.
Till now, one chamber at the 11-million-barrel Mangalore SPR, where two same size chambers are available, has been leased by Abu Dhabi National Oil Co (ADNOC).
The ISPRL is gradually releasing 8 million barrels from the SPRs to make space for government-owned Mangalore Refinery and Petrochemicals Ltd (MPRL) and Hindustan Petroleum Corp (HPC), the report said citing sources.
The state-run refiner will buy the oil from ISPRL at a price lower than offered by the supplier countries.
India is following Japan and South Korea in its commercialisation of its SPRs.
The aim of the policy change is to boost private participation in the two new facilities coming up in Padur, Karnataka (2.5 million tonnes under construction) and Chandikhol, Odisha (4 million tonnes under construction).
Reuters reported that imports from UAE may be cut down as ISPRL releases oil from SPR even though in small quantities.
ISPRL has started to sell about 5.5 million barrels of Upper Zakum oil from the UAE, which is stored in its Mangalore cavern, to MRPL, Reuters report added.
MPRL will lease 300,000 tonnes of storage capacity in Mangalore where it will store a different grade of crude, the report informed.
HPCL will take a similar-sized space in the about 7.5-million barrel Vizag SPR, which contains Iraqi Basra oil. HPCL wants the Basra oil so the full volume doesn't need to be sold.
In the next step, ISPRL will lease out 2.5 million tonne (over 18 million barrels) Padur storage, where a mix of Arab oil is stored. Padur has existing 2.5 million tonne capacity and another storage of the same capacity is being built.
According to the ew policy, Centre will also allow ISPRL to sell equivalent to 20 per cent of the overall SPR capacity in the India markets.
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