India’s state-owned Oil and Natural Gas Corporation (ONGC), the top explorer in the country, will build a new storage site at Mangaluru to hold about 13 million barrels of oil as the world’s third-largest crude oil importer looks to boost its resilience to supply shocks.
In the wake of the Iran war and the disrupted crude flows at the Strait of Hormuz, India found itself in search of alternatives to replace the lost Middle Eastern supply. Record crude oil imports from Russia have helped cushion the blow, but India realized it needs additional storage sites to hold commercial and strategic reserves.
India is one of the biggest crude oil importers, but also one of the most exposed to supply shocks as its current maximum reserve capacity can cover only eight days of national oil demand.
Therefore, ONGC now plans to have a new storage site in Mangaluru in the southwestern state of Karnataka on the Arabian Sea, capable of holding 1.75 million metric tons of oil, or about 13 million barrels.
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Half of this new storage capacity will be reserved for strategic storage and the other half will support ONGC’s commercial operations, the Indian Minister of State for Petroleum and Natural Gas, Suresh Gopi, told Parliament.
The new storage project will be funded by ONGC, Gopi said, as carried by Indian media.
Four months into the Middle East crisis, India’s government asked ONGC to build and fill a new site for strategic petroleum reserves, with an estimated investment of $1.6 billion, local outlet the Economic Times reported in June, quoting sources with knowledge of the plans.
Currently, India’s underground Strategic Petroleum Reserve storage has a total capacity of 5.33 million metric tons of crude oil, equal to only 39 million barrels of crude oil, or eight days’ worth of India’s oil consumption.
By Tsvetana Paraskova for Oilprice.com
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