India Initiates Construction of Commercial Crude Oil Storage

• 04 Apr 2024

India, a significant oil consumer and importer, embarks on building its inaugural commercial crude oil strategic storage to reinforce stockpiles against potential supply disruptions.

Key Points

• Strategic Storage Expansion: Indian Strategic Petroleum Reserves Ltd (ISPRL) invites bids for constructing 2.5 million tonnes of underground storage at Padur, Karnataka, signaling a strategic move to enhance oil reserves.
• Phase-II Development: Under Phase-II, ISPRL aims to establish a commercial cum strategic petroleum reserve in underground rock caverns, accompanied by above-ground facilities, at Padur-II, with an estimated cost of Rs 5,514 crore.
• Public-Private Partnership Model: The project adopts a public-private partnership (PPP) model, where private entities will design, build, finance, and operate the storage, with the aim of optimizing operational efficiency.
• Bid Evaluation Criteria: Bidders are required to quote financial grants or premiums for the project, with the tender awarded to entities offering the highest premium or the lowest grant.
• Operational Framework: The operator of Padur-II will lease out storage to oil companies, retaining India's first right on oil usage during emergencies, reinforcing national energy security.
• Strategic Importance: India's reliance on oil imports underscores the strategic significance of expanding crude oil storage capacity, enabling effective response to emergencies such as supply disruptions or conflicts.