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“The Committee are of the view that the existing refinery projects and the recently commissioned refineries may be asked to set up strategic storage capacity with a smaller capacity like 2 to 3 days at 5 to 6 locations which can bring up 15 to 20 days additional capacity in a definite time frame,” it said in the report.
Presently, the strategic petroleum reserves and the commercial oil stocks held by refiners cumulatively account for 72-74 days of crude inventory, as per analysts, lower than the International Energy Agency recommended 90 days inventory.
While standalone strategic storage caverns at different locations also helps, capacities near the existing refinery may encourage the oil PSUs to establish and maintain them which also gives them secured supplies, the committee highlighted.
For the same purpose, it said that the petroleum ministry may provide funds for creation of storage caverns to oil PSUs through Indian Strategic Petroleum Reserves (ISPRL), while the oil PSUs can store and maintain the caverns for their usage.
The committee noted that the strategic storage will be a dynamic concept as the total demand of petroleum products like diesel, petrol and ATF, etc. keeps on changing more on the higher side as the economy grows. “Therefore, the strategic storage capacity needs to be worked out with a future target in mind,” it said.
Consumption of petroleum products rose to 239.2 million tonnes in FY25 against 234.3 million tonnes in FY24, as per official data. For FY26, the country has projected its domestic petroleum product demand to reach a record 252.9 million tonnes.
The existing total crude oil storage capacity of 5.33 MMT is around only 2.2 per cent of annual domestic demand of FY25.
Push for faster execution of Phase II projects
In addition with the existing storage capacities, two additional strategic storage caverns–one at Orissa and the other at Rajasthan –have been approved and work is to be undertaken at these two storages.
“The committee expects the ministry to increase the strategic storage capacity in the country at a quicker pace and with faster execution,” it said.
Further, the Cabinet approved development of Commercial cum Strategic reserves under Phase II at Chandikhol (4MMT) and Padur (2.5 MMT) on PPP mode along with dedicated SPM’s and associated pipelines in 2021. However, no major development has been made in this regard.
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The government also said that ISPRL has been evaluating, from time to time, the possibility of augmentation of storage capacities based on technical and commercial feasibility.
The land acquisition for Phase II at Padur is in an advanced stage, the government informed the panel. Further, ISPRL is in the process of floating RFP for Padur so as to synchronize it with availability of encumbrance free land, the government said.
HPCL is using ISPRL Cavern-B at Visakhapatnam for storage of crude oil. HPCL has also hired 300 TMT space in Cavern-A of ISPRL at Visakhapatnam.