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Business News/ Economy / ONGC, GAIL explore possibility of setting up strategic gas reserves
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ONGC, GAIL explore possibility of setting up strategic gas reserves

The government has been considering the plan over the past few years. However, given the critical technical and infrastructure issues involved, the plans have so far not taken a concrete shape.

State-run energy majors ONGC and GAIL are exploring the possibility of setting up strategic gas reserves in the country.Premium
State-run energy majors ONGC and GAIL are exploring the possibility of setting up strategic gas reserves in the country.

Amid a global lookout for natural gas supplies, state-run energy majors ONGC and GAIL are exploring the possibility of setting up strategic gas reserves in the country, said two people in the know.

The two options available are old oil wells and salt caverns, and whenever reserves are set up, old wells would hold most of the gas, they said.

"ONGC and GAIL are currently looking at the possibility. When talks go ahead, ISPRL (Indian Strategic Petroleum Reserves Ltd) is expected to collaborate in the process," said one of the people mentioned above.

The gas reserves are likely to be set up in the western coast of the country, the person said, adding that a team from India visited Europe to understand the technical knowhow and its application in Indian conditions.

Mint earlier reported that India is setting up a strategic gas reserve on the lines of its strategic petroleum reserve (SPR). Queries sent to ONGC, GAIL and ISPRL were not immediately responded.

The government has been considering the plan to set up strategic gas reserves over the past few years. However, given the critical technical and infrastructure issues involved, the plans have so far not taken a concrete shape.

The process has gained momentum with prospects of higher demand going ahead and a steep fall in gas prices over the past one year. India is a net importer of natural gas and the expansion in the city gas distribution sector, fertilizer manufacturing among others, the consumption of gas is expected to grow.

During the current financial year (April-December), India's import of liquefied natural gas (LNG) stood at 22.85 billion metric standard cubic meter per day, against 20.01 billion metric standard cubic meter per day during the same period of the last fiscal.  

The Centre has set a target of increasing the share of gas in the energy basket to 15% by 2030 from the current 6%.

India already has strategic petroleum reserves and ISPRL, a wholly-owned subsidiary of the Oil Industry Development Board (OIDB) under the ministry of petroleum & natural gas, manages 5.33 million metric tonnes (MMT) of strategic crude oil storages in three locations in Vishakhapatnam, Mangalore and Padur.

The Vishakhapatnam facility with 1.33 MMT capacity was commissioned in June 2015, while Mangalore (1.5 MMT) and Padur (2.5 MMT) were commissioned in October 2016, and December 2018.

Further, ISPRL is preparing to lease out one of the 0.75 million tonnes-capacity storage caverns it operates in Mangalore, said the second person mentioned above, adding that foreign players are interested.
With this, the whole of the Mangaluru strategic petroleum reserve, which includes two caverns of 0.75 million tonne capacity each, will be leased out. UAE's Abu Dhabi National Oil Company (ADNOC) has been storing crude in one of the caverns since 2018 and has signed an agreement to use the Padur facility as well.

ISPRL would soon issue expressions of interest for leasing out the cavern, the person added. It is also constructing two other reserves under Chandikhol, Odisha (4MMT) and is expanding the Padur facility by 2.5 MMT.

A parliamentary standing committee in December last year had suggested setting up of more strategic petroleum reserves. "The ministry may provide funds for creation of storage caverns to oil PSUs through ISPRL, while the oil PSUs can store and maintain the caverns for their usage," the committee said in its report.

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Published: 06 Feb 2024, 09:13 PM IST
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