In view of the oil crisis arising due to the ongoing tension between America and Iran, the Central Government has decided to create a new emergency oil reserve. This reserve will be created by Oil and Natural Gas Corporation (ONGC). According to a report in Economic Times, this entire project is estimated to cost around ₹15,000 crore. This underground emergency oil storage facility will be built in Mangaluru, Karnataka and will have the capacity to store 1.28 lakh barrels of oil.
Currently, India’s total strategic crude storage capacity is about 39 million barrels, which has been kept for use in emergency situations. India consumes about 50 lakh (5 million) barrels of oil daily; Thus, the existing reserve can meet the country’s needs for about 8-9 days. After the completion of the new Strategic Oil Reserve Project of 1.28 lakh barrels, this capacity will increase by about 33% – adding about three days of supply. As a result, the country would have enough oil reserves to last for about 11 days in the event of a war or oil crisis.
What is petroleum reserve?
Petroleum reserves are the stock of crude oil, petrol or diesel that a country keeps for future supply needs. There are two types of petroleum reserves:
1. Strategic Petroleum Reserve
Think of it like a treasure trove for petroleum. The government keeps it especially for emergency situations. It is not used in normal times, but only in situations like war, oil crisis or supply interruption. India has three strategic petroleum reserves in Mangaluru, Padur and Visakhapatnam. Here oil is stored in large cave-like tanks under the ground.
2. Commercial Petroleum Reserves
Oil companies like Indian Oil maintain commercial stocks to ensure continuous supply to petrol pumps. These reserves meet daily needs and are usually stored in large tanks above ground.
₹5,000 crore for construction and ₹10,000 crore for oil filling
According to reports, the cost of the project has been divided into two parts. ONGC will spend approximately ₹5,000 crore on building a cavern underground. Filling crude oil at this facility may require an investment of ₹10,000 crore, which is possible depending on the current market prices and exchange rates. It is not yet clear how ONGC will compensate for this huge investment. It is also yet to be decided whether this facility will serve only as an emergency reserve or it will also be used for commercial activities to earn revenue.
Till now, all strategic petroleum reserve projects in the country have been fully funded by the government and managed by ‘Indian Strategic Petroleum Reserves Limited’ (ISPRL). This is the first time that ONGC is making such a big investment.
Reliance Industries held its 49th Annual General Meeting (AGM) on Friday, June 19. Company Chairman Mukesh Ambani addressed about 44 lakh shareholders. He announced that the company is entering the markets of Europe and Africa and is also preparing to launch an IPO for Jio.
Ambani said that the documents for Jio IPO were submitted to SEBI on June 19. A total of 27 crore (270 million) new Jio shares will be issued; However, no information has been given yet about the share price.