As crude prices plummet, India’s tanks are only half full
Global crude oil prices are plummeting to historic lows. On Monday, the benchmark North Sea Brent was at $33.52, roughly half of what it was a year ago, but India’s storage tanks are only a little over half full.
India has the capacity to hold 5.33 million tonnes of crude oil, in three underground cavern systems at Visakhapatnam, Mangaluru and Padur (Karnataka), built at a cost of ₹4,000 crore by the government-owned Indian Strategic Petroleum Reserves Ltd (ISPRL).
HPS Ahuja, CEO and MD of the company, told BusinessLine on Tuesday that 56 per cent of the storage capacity has been filled with crude; the other 44 per cent is being filled in, for which orders have been placed.
Asked when the caverns will be fully tanked up, Ahuja said he could not give a timeline because “it is a time-consuming process which depends on a several factors”. He, however, said that there in no problem in crude carriers docking at Indian ports and discharging the goods.
(The storage facilities are gigantic, man-made, underground caverns that are permanently sealed. Crude oil is put in and taken out through pipes. From floor to roof, they are as high as a 10-storey building and as wide as 12 Mercedes Benz cars. The crude is kept under ‘hydraulic confinement’ — water, carefully let into the rocks around the tunnel at high pressure, prevents the crude from seeping out.
The ‘strategic petroleum reserves’ are meant to be a buffer against an event that might cause a disruption in supplies. Crude is regularly put in and taken out, but a quantity of crude is always there to fall back on in times of emergency.)