To eliminate the risk of price fluctuations and poor fuel supplies India will build its first emergency crude oil storage terminal.
The Visakhapatnam terminal, which will be complete by mid-2011, will have a capacity of 1.33 million tonnes.
Two more terminals, to be built at Mangalore on the west coast by 2012, will lift national storage capacity by 5 million tonnes.
India imports over three-quarters of its oil needs. It imported 109.32 million tonnes of oil in the nine months ended 31 December, a 12% increase from a year earlier, according to the oil ministrys Petroleum Planning and Analysis Cell.
The storages will be filled at government cost and that may not be the most economical way of doing it, oil secretary S. Sundareshan says. We are looking at various options. Somebody may want to use it as a storage hub.
Overseas companies may be allowed to lease capacity at the oil terminals in exchange for supplies, he said. All three facilities are located near refineries.
Indian refineries are expanding capacity to meet demand in the worlds second-fastest growing major economy. Mangalore Refinery and Petrochemicals plan to process 15 million tonnes of crude a year by 2012 from the current 9.69 million tonnes.
The countrys second largest refiner Indian Oil is building a 15 million tonne a year project in the eastern state of Orissa and Bharat Petroleum and Oman Oil are jointly setting up a 6 million tonne a year plant in Madhya Pradesh state.