Indian Oil, Trafigura, Vitol, L&T Eye Chandikhol Crude Storage Project

As per the Mint report, Indian Oil Corp., Trafigura, Vitol and Larsen & Toubro Ltd. are among the firms that have shown interest in developing a strategic petroleum reserve at Chandikhol in Odisha. Afcons Infrastructure, BPCL, HPCL and Hindustan-Mittal Energy Ltd. (HMEL) are also in the fray. 

The proposed reserve is planned with a capacity of 4 million tonnes.

Project Cost and Process

As per the news reports, the Chandikhol reserve would need about $1 billion to construct and another $2 billion to fill. It will follow a design-build-finance-operate-transfer model. Developers will be responsible for design, building, operations and trading of stored crude. The request for proposal is expected once the state government allocates land.

Existing Reserves

India has 5.33 million tonnes of strategic reserves located in Visakhapatnam (1.33 mmt), Mangaluru (1.5 mmt) and Padur (2.5 mmt). These were built by Engineers India Ltd. The current storage is enough for around 9.5 days of crude oil consumption.

India’s Oil Use

As per the news reports, India consumes about 5.5 million barrels of crude oil per day and imports 85% of its requirement. Including reserves held by oil marketing companies, the country has emergency cover equal to 77 days of imports. 

This is lower than the 90 days maintained by International Energy Agency members. India became an associate member of the IEA in 2017 and applied for full membership in 2023.

Private and Global Role

As per The Economic Times reports, Megha Engineering & Infrastructures Ltd. won the contract for the first private-sector reserve at Padur with 2.5 mmt capacity. ADNOC is the only international firm currently leasing space in India’s reserves. Kuwait Petroleum has shown preliminary interest in the second phase. 

The government is also studying 6 new sites, including at Mangalore SEZ and in Rajasthan’s Bikaner.

Read more: Crude Oil Prices Steady on Sep 18 After Fed Rate Cut, Demand Prospects Brighten!

Conclusion

The Chandikhol reserve is part of the second phase of India’s strategic petroleum reserve programme and is expected to expand storage capacity further.

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