India to build its first strategic oil storage by January 2014

 India will build its first strategic oil storage by January in an effort to insulate itself from supply disruptions, Oil Minister MVeerappa Moily said today.

India, which is 79 per cent dependent on imports to meet its crude oil needs, is building underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tonnes of crude oil. This is enough to meet nation's oil requirement for 13-14 days.

"The storage at Visakhapatnam is expected to be commissioned in January 2014," Moily said here.

Visakhapatnam facility would have the capacity to store 1.33 million tonnes of crude oil in underground rock caverns. Huge underground cavities, almost ten storey tall and approximately 3.3 km long are being built.

A similar facility in Mangalore will have a capacity of 1.55 million tonnes and would be mechanically completed by March 2014. A 2.5-million tonnes storage at Padur, near Mangalore, would be completed by end of current fiscal, he said.

With the commissioning of Visakhapatnam storage, India will join nations like the US, Japan and China that have strategic reserves. These nations use the stockpiles not only as insurance against supply disruptions but also to buy and store oil when prices are low and release them to refiners when there is a spike in global rates.

Originally, India Strategic Petroleum Reserves Ltd (ISPRL), the state-owned firm building the strategic stockpile, was to build the Visakhapatnam facility by October 2011 while the Mangalore storages were to be mechanically completed by November 2012. The storage at Padur was scheduled for completion in December, 2012.

"Visakhapatnam storage is 94.6 per cent complete, Mangalore is 89.2 per cent and Padur is 86 per cent complete," Moily said.

The Cabinet had in January 2006 approved building of the strategic crude oil storages at a cost of Rs 2,397 crore but due to cost and time overrun the capital required is now estimated at Rs 3,958 crore.

The Visakhapatnam facility will cost Rs 1,038 crore, Mangalore Rs 1,227 crore and Padur Rs 1,693 crore.

ISPRL has till date received Rs 2,529 crore from Oil Industry Development Board (OIDB) and Rs 100 crore from Hindustan PetroleumBSE 1.93 % Corp Ltd ( HPCLBSE 1.93 %), officials said adding that the firm requires Rs 1,195 crore either from OIDB or the Government to complete the projects.

ISPRIL would need Rs 490 crore in current fiscal and Rs 705 crore in the next, they said.

The Economic Times

India plans oil import from Iran to cut import bill, CAD

The oil ministry has worked out a plan to save $22 billion in the oil import bill from Iran thus helping reduce the current account deficit (CAD), petroleum minister M Veerappa Moily has said. 

"Oil (imports) is one of the components responsible for CAD. The prime minister has told us to save $25 billion in the import bill. As of today, we have pieced together a plan to save $22 billion in import bill," Moily said. 

He said the savings would be around one percent of the GDP. 

Moily was talking to reporters Tuesday at an event to present a cheque for Rs.5 lakh to the widow of Arjuna awardee sportsman late Makhan Singh. 

Senior oil ministry sources told IANS that the plan includes renewing imports from sanctions-hit Iran, which India pays in rupees thereby saving foreign exchange and reducing the CAD. 

Officials calculate that importing, for instance, 10 million tonnes oil from Iran means saving $10 billion in foreign exchange outgo. During the last fiscal, India imported 13.1 million tonnes of oil from Iran, down from 18.11 million tonnes of 2011-12. 

After not buying any oil from Iran in first four months of the current fiscal, imports were resumed this month with state-run Mangalore Refinery and Petrochemicals getting the first tanker-load. 

In view of the current volatility of the rupee against the dollar, India is discussing with Iraq the possibility of trade in local currencies, which would help insulate India's oil imports from Iraq also.

Source:Times of India

Oil companies demand one-time hike in diesel price

       
        With 12 per cent drop in rupee value against the US dollar making imports costlier, state- owned oil companies have demanded a one-time steep increase in diesel rates to make for the widening losses. Losses on sale of diesel at government controlled rates, had dropped to under Rs 3 per litre in May following monthly increases of up to 50 paise a litre. But with the rupee depreciating against the US dollar, the losses have widened to Rs 10.22 per litre.

"We had requested the government for an increase in prices on ad-hoc basis. The decision on the increase rests with the government. The government of India has to take a decision on it. I have no comments on it," IOC director ( finance) P K Goyal said. Losses on diesel sales have widened to Rs 10.22 from Rs 9.29 a litre in the bigging of the month. Besides diesel, the oil companies are losing Rs 33.54 per litre on kerosene and Rs 412 per 14.2-kg cooking gas (LPG) cylinder.

Speaking to reporters after flagging off a biking expedition to Ladakh, Goyal said the total revenue loss or under- recoveries on diesel and cooking fuel was estimated at Rs 80,000 crore at the beginning of the fiscal, which have now widened to Rs 140,000 crore. "Rupee has depreciated 12 per cent since April. It was 59.39 to a dollar and today it is 64.10. Rupee depreciating by one against the US dollar adds Rs 8,000 crore to our under- recoveries (revenue loss)," he said.
The government had in January allowed oil companies to raise diesel rates by up to 50 paisa per month till such time that the losses on the most consumed fuel in the country are wiped out.
With prices being raised regularly, the losses on diesel had come down to below Rs 3 per litre in May but rupee falling by 12 per cent since April has resulted in the difference climbing to Rs 10.22 per litre. Oil companies feel 50 paisa increase is insufficient and there should a one-time steep increase to cover for fall in rupee.

  Oil minister M Veerappa Moily had on August 14 stated that oil company suggestion of one-time hike was under consideration but no decision has been taken yet.

"That's under consideration, but we have not yet decided," he said.

Moily, however, said there is no proposal to raise LPG or kerosene rates.

Diesel price was last hiked on August 1 when prices in Delhi went up by 56 paisa (after including local taxes) to Rs 51.40 per litre. IOC, Bharat Petroleum and Hindustan Petroleum had lost Rs 25,579 crore in revenue in the first quarter ended June 30, of which the government made good Rs 8,000 crore by way of cash subsidy.

Oil companies demand one-time hike in diesel price