ONGC Greenlights Strategic Crude Oil Storage Expansion Project
ONGC has sanctioned a project to enhance India’s strategic crude oil storage capacity by 1.75 mn tonnes at Mangaluru in Karnataka, boosting the nation’s energy security in the face of global supply uncertainty. The project will help India’s expanding energy needs and strategic petroleum reserves.
Government-owned Oil and Natural Gas Corp. gave the go-ahead to increase the size of the nation's strategic oil reserves. In light of the energy shock caused by the Iran war, there has been an effort to make energy systems more resilient. An official document states that the country's biggest oil and gas producer's board of directors approved adding 1.75 million tonnes of capacity in Mangaluru, Karnataka, to the country's crude reserves. Both the budget and the schedule were not disclosed.
When completed, the project will enhance the reserves controlled by the state-owned corporation that controls the stocks, Indian Strategic Petroleum Reserves Ltd. There are currently 5.33 million tonnes of underground caverns owned by Indian Strategic, spread across three locations on the east and west coasts. Two additional locations are also under construction, which will increase the total storage capacity to 6.5 million tonnes.
Storage Expansion Project is of ‘National Improtance’
The Persian Gulf area supplies India with natural gas and crude oil in large quantities. Importers were compelled to seek out alternatives due to the energy crisis caused by the near-total closing of the Strait of Hormuz during the Iran conflict. State-owned oil refiners and producers had previously only built commercial storage facilities; ONGC is the first such organisation to use its own finances to construct strategic stocks. According to ONGC's filing from July 10th, the new project is of "national importance".
In addition, it stated that it would follow the Ministry of Petroleum and Natural Gas's instructions and construct related facilities at the location. A month's worth of domestic demand should be met by oil, liquefied natural gas and petroleum gas reserves, according to the government. Government officials have taken steps to alleviate financial strain on the state by supporting public-private partnerships and by requesting that state-run refineries and manufacturers increase their commercial reserves and contribute to the development of strategic stockpiles.
The new caverns could be utilised for storage by ONGC in cooperation with MRPL. Mangalore Refinery and Petrochemicals Ltd., a subsidiary of ONGC, runs a 300,000-barrel-a-day refinery in Karnataka. Existing caverns in Mangaluru are leased to a number of corporations, including Abu Dhabi National Oil Co., the biggest oil company in the United Arab Emirates.
India Expanding its Energy Storage Systems
Rising demand—which has now surpassed China’s—has prompted India to seek for years to increase its strategic oil storage capacity. The ongoing crisis in the Middle East has seemingly expedited the plans to increase the capacity to store strategic petroleum reserves in light of the present oil supply problem. In addition to the facility that will be constructed by ONGC, New Delhi has plans for two additional facilities. The first facility will have a capacity of 4 million tonnes, which is equivalent to 29 million barrels.
The second facility will have a capacity of 2.5 million tonnes, which is equivalent to approximately 18.3 million barrels. India is also thinking of hosting oil inventories from other countries. The national oil and gas firm of the UAE announced its intention to raise the quantity of crude it keeps in India to 30 million barrels during Prime Minister Modi's recent visit to the UAE. Conversely, ADNOC may increase the quantity of Indian crude oil stockpiled in the United Arab Emirates, more especially in the port of Fujairah, which is located beyond the Strait of Hormuz.
