India’s strategic crude oil reserves already marred by huge delays

Discussion in 'Defence & Strategic Issues' started by Singh, Sep 4, 2012.

  1. Singh

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    Delays of the strategic kind : India’s strategic crude oil reserves



    The project was started in 2004. Three underground strategic crude oil reserves, to hold reserves equivalent to 14 days of India’s oil consumption, were to come up at Visakhapatnam (1.33 mmt – originally 1 mmt), Mangalore (1.5 mmt) and Padur (2.5 mmt). The scheduled date of completion of this project was four years. Double the time has already elapsed and not even one of the reserves has been completed. As per this report in the Hindustan Times, the latest projected dates of completion are:


    The total cost of this project in 2004 was around Rs 1,650 crore. Now, it has already escalated to Rs 23,000 crore. This excludes the cost of purchasing 5.33 mmt of crude oil at current prices, which are three times higher than those in 2004.

    Missed deadlines, cost overruns on a ‘strategic’ project. And no one seems to care. Perhaps that is why the government is already formulating another plan for constructing additional strategic crude oil storage facilities to store 12.5 mmt of crude oil. It is estimated to cost Rs 55,000 crore.



    Even if these additional reserves are miraculously constructed in a short time, India would then have a total of about 55 days of crude oil reserves. Even then, India would be well short of the world standards – oil importing member-countries of International Energy Agency (IEA) are committed to hold oil stocks equivalent to 90 days of net oil imports.

    These plans may sound worthless but planning is still worth it. Didn’t Dwight D. Eisenhower say it best: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

    Delays of the strategic kind | Pragmatic Euphony
     
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  3. Singh

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    Rs 55,000 cr oil depots on the cards



    A Rs. 55,000-crore plus blueprint has been prepared for creating additional strategic crude oil storage facilities in the country to store 12.5-million tonnes (mt) of oil for usage during emergency situations arising in the wake of a natural calamity or any unforseen global event.

    Such events generally lead to oil supply disruptions and an abnormal increase in oil prices.

    Any increase in crude oil prices affects India in a big way since it imports over 80% of its oil requirement every year.

    The government spent $150 billion (Rs 8.3 lakh crore) to buy 171 mt of crude, or 84% of the total requirement of 205 mt, in the last fiscal year.

    While a Rs. 23,000-crore plus plan to create strategic crude oil facilities for storing 5.3 mt is already under way at three locations, the plan to create additional storage facilities will give India access to 17.8 million tonnes per annum (mtpa) of crude oil supplies.

    "The new storage facilities along with those under construction will give India about 55 days of cover to counter any supply disruptions in the international oil market," said a senior petroleum ministry official, adding that the new plan will soon be sent to the Cabinet for approval.


    "Engineers India Limited (EIL) has completed a pre-feasibility study for setting up crude storage facility in the next phase and has identified four additional locations for preparation of detailed feasibility reports (DFR)," the official said.

    Each of these new locations will have a crude oil storage capacity of 2.5 mt and will come up at Bikaner in Rajasthan, Chandikhol in Odisha, Rajkot in Gujarat and at Padur in Karnataka.

    While all the earlier three strategic crude oil storages would be in underground rock caverns, the four new such facilities have been proposed as a mix of rock caverns, salt caverns and underground concrete tanks.

    Following oil security concerns, crude oil storage of 5.3 mt is underway at three locations including Visakhapatnam (1.33 mmt), Mangalore (1.5 mmt) and Padur (2.5 mmt).

    The facility at Visakhapatnam is likely to be completed by March 2013, followed by Mangalore in end 2013 and Padur in the middle of 2014.

    [​IMG]

    Rs 55,000 cr oil depots on the cards - Hindustan Times
     
  4. Singh

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    A Dated Blogpost on the same

    Indian Strategic Petroleum Reserves.


    To recapitulate, this is what the Government of India had announced in 2004:

    In 2006, the government again highlighted — what was very little progress during the previous two years — as its achievement.

    There isn’t much change in the progress report as of April 2010:

    Here is more on the specific Visakhapatnam project from the same report:


    Two, the project was envisaged in 2004 and was scheduled to be completed in four years. As things stand today, only one of the three sites are likely to be completed after eight years. The progress on the other two sites is even slower.

    Three, while the oil importing member-countries of International Energy Agency (IEA) are committed to hold oil stocks equivalent to 90 days of net oil imports, India’s ISPR, when completed, will hold only 14 days worth of India’s oil consumption.

    The instinctive reaction to this story has to be the cynical one: Who cares? The apathy of the media to such an important ‘strategic’ project only adds to that cynicism. Alas, this is the way India functions.

    Perhaps it would not be unfair then to concur with what John Galbraith famously said about India: “This place is functioning anarchy and it proves that God exists!”

    Weekend quiz answer | Pragmatic Euphony
     
  5. Singh

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