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India to make provision in budget to fill oil storage
[NEW DELHI] India will make a provision in the budget to fill up strategic reserves for crude, local daily Business Standard quoted oil minister Dharmendra Pradhan as saying on Thursday, taking advantage of the falling global oil prices.
Mr Pradhan was addressing an infrastructure summit organised by the daily, which tweeted his comments. The summit was not open for other media.
A fall in oil prices to their lowest level in six years will help Finance minister Arun Jaitley reap a fiscal windfall of billions of dollars when he present his first annual budget next month.
India, the world's No 4 crude consumer, is building storage facilities at three locations in the south of the country to hold a total 36.87 million barrels of oil, enough to cover about 13 days of its needs in case of a supply disruption.
The first underground facility at Vizag that can hold 9.75 million barrels is ready for commissioning, said Rajan Pillai, chief executive of Indian Strategic Petroleum Reserves Ltd (ISPRL).
The Vizag facility has two compartments of 7.55 million barrels and 2.20 million barrels. The smaller compartment will be used by Hindustan Petroleum for its 166,000 barrels-per-day Vizag refinery in Andhra Pradesh, he said.
"The infrastructure is ready. We are waiting for some government approval for commissioning the storage," Mr Pillai said, adding current low oil prices provided "an excellent opportunity" to fill the caverns.
With global oil prices trading at around US$47 a barrel, it would cost around US$354 million to fill the bigger compartment at Vizag.
Mr Pillai said his company was in talks with the government on filling the storage.
He said the remaining two strategic storage facilities at Padur and Mangalore in southern Karnataka state that can together hold 29.3 million barrels are expected to be ready by October 2015.