(INFRALINE) — India will set up three strategic oil reserves at Rajkot, Mangalore and Vishakhapatnam in collaboration with the US. The Rs 43.5 billion project will stockpile 55 million tonnes of crude oil to meet emergency requirements. (US$1=Rs 45).
While Rajkot will have the biggest reserve of 25 million tonnes, the Mangalore facility will stock 15-million tonnes and the Vishakhapatnam unit 10-million tonnes of crude oil. Petroleum ministry sources revealed that the locations for oil reserves have been determined by their likely safety from enemy strikes and ability to feed refineries in emergencies.
More oil reserves will be built to maintain an overall stock of 150 million tonnes of crude that can last forty-five days. While the stocked crude will cost Rs 156 billion at current prices, the carrying cost will be Rs 18 billion a year.
India’s National Security Council has also argued for a strategic oil reserve since its absence was one of the factors that restrained India from attacking Pakistan following the 13-December terrorist strike on India’s Houses of Parliament, while the other was India’s fears of an oil-supply cut from the Middle East, from where India imports 70% of its requirements.
Petroleum minister Ram Naik visited US strategic oil reserves at Bryan Mount near Houston in June 2003, and India is also in touch with the Paris-based International Energy Agency to develop and maintain strategic reserves in the country.