India revives plan to build oil stocks

India revives plan to build oil stocks

NEW DELHI (Reuters): Worries of a disruption in oil supplies after terror attacks on the United States have revived India's three-year-old plan to build a strategic reserve of crude oil, government officials said on Friday.

State-run refiners are also in the process of doubling product tankage capacity to 0.87 million kiloliters from 0.43 million kiloliters, the official said.

"We are actively discussing the proposal. We are discussing who should bear the cost of building the reserves," a government official, who asked not to be named, told Reuters.

"As of now we are very comfortable with oil products. We normally have supplies for 25-35 days, so there is no problem," he said.

In 1998, the federal petroleum ministry prepared a plan to construct storage tanks to stock crude oil to provide oil security in times of war or similar situations, or for use if oil prices shoot up.

The plan was first discussed in 1995 after product prices skyrocketed to touch a new high.

The plan has again gathered momentum and is now being considered by a panel of officials including members of India's Oil Coordination Committee, a senior official of Indian Oil Corporation told Reuters.

The earlier proposal sought to build tanks to stock 12.55 million tons, which would have been enough to keep refineries in operation for 45 days.

It had proposed to initially build facilities to store 4.25 million tons of imported crude to provide for 15 days of contingent supply.

But these numbers are now being reviewed, the official said.

"Since then the refining capacity has gone up significantly. We are reassessing the tankage requirement," he said.

Officials said Indian Oil Corporation, India's largest refiner, Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. were enhancing their product tankage facilities this year.

IOC plans to raise tankage capacity to 0.40 million kiloliters in 2001/02 (April-March) from 0.19 million kiloliters in 2000/01, while BPCL will raise it to 0.24 million kiloliters from 0.12 million kiloliters.

HPCL would raise its tankage capacity to 0.22 million kiloliters from 0.07 million.

India has a refining capacity of 114 million tons a year and imports 70 percent of its crude requirement.