India to commission its first strategic oil storage by January 2014

In an effort to shield itself from supply disruptions, India is building strategic oil storage facility. The first such storage facility is expected to be commissioned in January 2014 at Vishakhapatnam. The facilities are being built by state owned firm India Strategic Petroleum Reserves Ltd (ISPRL). 
India is building underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tonnes of crude oil. This is sufficient to meet nation’s oil requirement for 13-14 days.
Visakhapatnam facility would have the capacity to store 1.33 million tonnes of crude oil in underground rock caverns. Huge underground cavities, almost ten storey tall and approximately 3.3 km long are being built. 

Why India is building strategic oil storages?

India meets around 80% of its crude oil needs from imports. Dependence on oil import makes it vulnerable to supply disruptions as well as changes in the prices of crude oil which could have ramifications in India. To counter this, oil storages would serve as a stock to manage supply disturbances as well as to buy and store oil when prices are low and release them to refiners when there is a spike in global rates. With this facility, India will join countries like the US, Japan and China that have strategic reserves.

Month: Current Affairs - October, 2013