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COMMERCIAL CRUDE STORAGE

5th April, 2024

COMMERCIAL CRUDE STORAGE

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Context

  • India, a significant oil consumer and importer, aims to bolster its energy security by constructing its first commercial crude oil strategic storage.

Details

  • ISPRL's Initiative: Indian Strategic Petroleum Reserves Ltd (ISPRL), tasked with building and operating strategic petroleum reserves, has initiated the construction of underground storage in Padur, Karnataka.
  • Expansion Plans: Under Phase-II, ISPRL plans to build a commercial cum strategic petroleum reserve with a capacity of 2.5 million tonnes at Padur-II, following the successful completion of Phase-I storages at three locations.
  • PPP Model Implementation: The Padur-II project will be executed under a public-private partnership (PPP) model, where private entities will design, build, finance, and operate the storage facilities.
  • Tender Details: Bidders are invited to submit proposals indicating either the financial grant required for construction or the premium/fee they propose to offer. The project will be awarded based on the highest premium or the lowest grant sought.
  • Operational Framework: The operator of Padur-II will lease out storage space to oil companies, allowing them to store oil and sell it to domestic refiners. However, in emergencies, India retains priority access to stored oil.
  • Timeline and Land Acquisition: Bids for the project are due by April 22, with the tender set to be awarded by June 27. ISPRL is acquiring approximately 215 acres of land for Padur-II.
  • Importance and Utilization: India, heavily reliant on oil imports, will utilize strategic reserves during emergencies such as supply disruptions or wartime scenarios.
  • Existing Utilization and Future Plans: Part of the Phase-I reserves has been leased to Abu Dhabi National Oil Company (Adnoc), with plans to fill vacant storage slots. The government had allocated funds for this purpose but deferred the plan, with no allocation made in the recent budget.
  • Operational Flexibility for Adnoc: Adnoc has been granted permission to export crude oil stored in Mangalore reserves, providing operational flexibility to the company in managing its inventory.

READ ALL ABOUT STRATEGIC OIL RESERVES AND ITS IMPORTANCE: https://www.iasgyan.in/daily-current-affairs/strategic-petroleum-reserves

https://www.iasgyan.in/daily-current-affairs/strategic-oil-reserve

PRACTICE QUESTION

Q. Discuss the significance of strategic petroleum reserves (SPRs) in enhancing India's energy security. Evaluate the strategic and economic implications of India's expansion of SPRs and analyze the challenges and opportunities associated with their establishment and management.