India will move forward with the expansion of its strategic crude oil reserves through a new storage project in Mangalore, in the state of Karnataka. The initiative will be led by the state-owned Oil and Natural Gas Corporation, known as ONGC.
According to corporate documentation, the project will add 1.75 million tonnes of oil storage capacity. This figure is equivalent to approximately 12.8 million barrels and will increase the strategic capacity available in Mangalore to counter potential supply disruptions.
ONGC to finance new storage capacity
For the first time, ONGC will allocate its own capital to the construction of infrastructure linked to India’s strategic oil reserves. Until now, state-owned companies in the sector had concentrated their investments in commercial depots used for their regular operations.
The company described the project as an initiative of national importance. It also indicated that the associated facilities will be developed under the guidelines of India’s Ministry of Petroleum and Natural Gas.
Furthermore, the final cost and construction schedule have not yet been reported. The expansion will be integrated into the system managed by Indian Strategic Petroleum Reserves Ltd., the state entity responsible for managing the country’s emergency inventories.
Mangalore to strengthen its role in energy security
Currently, Mangalore has an underground cavern with a capacity of nearly 1.5 million tonnes. With the planned addition, the complex could reach around 3.25 million tonnes of strategic storage.
Additionally, the location offers operational advantages due to its proximity to Mangalore Refinery and Petrochemicals Ltd., an ONGC subsidiary that manages a refinery with a processing capacity of approximately 300,000 barrels per day.
The connection between the caverns and the refinery could facilitate the reception, preservation, and utilization of crude oil during an emergency. It would also allow for the coordination of strategic inventories with the commercial needs of the refining system.
India seeks to increase coverage against supply cuts
Currently, India possesses strategic reserves distributed across three underground sites located on its eastern and western coasts. The combined capacity reaches 5.33 million tonnes of crude oil.
However, these inventories cover about eight days of national demand according to data published by OilPrice. Consequently, the Government intends to expand its capacity to have sufficient reserves to meet around one month of domestic consumption.
Likewise, two other projects are under development with a combined capacity of 6.5 million tonnes. One of them will store four million tonnes, while the second will add 2.5 million.
The Strait of Hormuz accelerates India’s plans
The expansion gains relevance due to India’s high dependence on imports from the Persian Gulf. Difficulties in moving hydrocarbons through the Strait of Hormuz have forced the country’s buyers to seek alternative routes and suppliers.
In this context, New Delhi is promoting public-private partnerships to reduce the financial burden on the State. At the same time, it has requested state producers and refineries to increase their commercial deposits and participate in the formation of strategic inventories.
The goal is to reduce the impact of a crisis on refineries, fuel prices, and industrial activity. A larger reserve would also provide more time to secure alternative shipments during a maritime closure or a prolonged disruption.
ADNOC maintains presence in Mangalore caverns
Furthermore, the Abu Dhabi National Oil Company already utilizes part of the Indian infrastructure. The United Arab Emirates company has leased space in the Mangalore caverns and maintains crude oil stored in the country’s strategic facilities.
ADNOC is also evaluating increasing its inventories in India as part of its cooperation with Indian Strategic Petroleum Reserves Ltd. This arrangement allows foreign companies to store oil while the Government retains access to the resource under previously agreed conditions.
With ONGC’s new investment, India will expand its capacity to respond to energy crises and strengthen Mangalore’s role as a strategic hub for crude oil storage.
Source: Rigzone
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