To ensure energy security, the Government of India has decided to set up 5 million metric tones (MMT) strategic crude oil storages at three locations namely, Mangalore, Visakhapatnam and Padur (near Udupi). These strategic storages would be in addition to the existing storages of crude oil and petroleum products with the oil companies and would serve as a cushion in response to external supply disruptions. The construction of the proposed strategic storage facilities is being managed by Indian Strategic Petroleum Reserves Limited (ISPRL), a Special Purpose Vehicle, owned by Oil Industry Development Board (OIDB).

The proposed storage sites are located near east and west coasts so that they are readily accessible to the refining sector through marine distribution.

Strategic Crude Oil Reserves would be in underground rock caverns and are expected to be operational by 2012. Underground rock caverns are considered the safest means of storing hydrocarbons. The estimated cost of the project is around Rs.2400 crore at September 2005 prices excluding the cost of crude oil for filling the caverns. ISPRL will have ownership and control of the crude oil inventories and will coordinate the release and replenishment of Crude Oil Stock during supply disruptions through an Empowered Committee to be constituted by the Government of India.

Visakhapatnam Project:

EIL has been appointed as Project Management Consultant. EIL has, in turn, appointed M/s. SWECO of Sweden as their back up consultant. Supplementary investigations carried out at site through M/s RITES provided the inputs required for determining the optimal cavern capacity. Based thereon, the storage at Visakhapatnam originally planned for storing 1.0 MMT of crude, has been enhanced to 1.33 MMT. All requisite environmental clearances from Ministry of Environment & Forest (MOE&F) and State Pollution Control Board have been received including the revised clearances for enhanced storage capacity. Hindustan Construction Company Ltd. (HCC), one of India’s premier infrastructure construction companies has been awarded the underground civil works contract. The effective date for commencement of construction of the cavern is January 16, 2008. The project is scheduled to be completed by January 2011. The contractor has mobilized personnel at the site and work on the Access tunnel and the shafts have commenced. HCC bagged the order for Rs.375.38 crores, through a Net based Reverse Auction process, a novel method for a rate contract of such a large magnitude. The Project involves excavation of huge underground caverns, 30 m high (almost 100 feet) and 20 meter wide. The total length of the caverns will be more than 3 kilometers and the amount of rock expected to be excavated will be approximately 5 million tons. HCC has obtained necessary clearances from Labour Department.

National Insurance Company Ltd. has been awarded the Contractors’ All Risk Insurance cover of the underground civil works.

For the above ground works, the NIT for prequalification of bidders has been issued on May 1, 2008. Based on the discussions with the Backup consultant regarding the process design basis, the scope of above ground works has been finalized. The bid package is likely to be finalized by June 2008.

Mangalore Project:

EIL has been appointed as Project Management Consultant. EIL has, in turn, appointed M/s. Geo-stock of France as their back up consultant. Government has approved storage of 1.5 MMT of crude oil. However, supplementary investigations are being carried out at site through M/s RITES for determining the optimal cavern capacity. The environmental clearance dated 11th March 2008 has been received from MOE&F. Land for the project has been acquired by Mangalore Special Economic Zone Ltd. (MSEZL). On account payment of Rs.41 crore (approx.) has been made to MSEZL. Approval has been obtained from Development Commissioner, Ministry of Commerce for establishing the unit in SEZ area. Central Line Survey for pipeline route has been completed. Cadastral survey report for the pipeline route is under review by EIL. The tenders for pre-qualification of underground bidders is likely to be issued shortly.

Padur Project :

Cadastral Survey for plot is completed. Application has been filed with Karnataka Udyog Mitra on 29th April 2008 for acquisition of land for the site through Karnataka Industrial Area Development Board (KIADB). Central Line Survey for the proposed 35 km pipeline route has been completed. Cadastral survey for the same is nearing completion. Application has also been filed with Department of Environment and Ecology, Government of Karnataka for approval of the terms of reference for the environmental impact and risk assessment reports.