Plan To Protect Crude Supply In The Works.

New Delhi, March 6: The petroleum ministry and PSU oil retailers are trying to thrash out a strategy on steady oil supply in the wake of soaring crude prices caused by the political turmoil in Libya and West Asia.

Senior ministry officials and heads of PSU oil firms are discussing options such as hiring very large crude carriers (VLCCs), storing oil in other countries and increasing supplies from South American nations.

Officials said the ministry had asked the oil firms to come out with concrete measures soon. India imports 80 per cent of its crude requirement.

“West Asia and North Africa, where major Opec countries are located, meet 40 per cent of world’s crude oil consumption and hold more than 65 per cent of proved oil reserves. In a year when we expect world dependence on Opec oil supply to increase, concerns over a wider disruption of supplies from Opec countries will fuel further oil price increases,” Sridhar Chandrasekhar, head of Crisil Research, said.

Sources said the meeting discussed hiring some additional VLCCs and the need for greater focus on strategic storage of crude.

It also looked at the possibility of leasing facilities at potential storage locations such as Israel and building sufficient inventory in the country.

“India has just 9.8 million barrels of crude stashed so far. It plans to put 40 million barrels into a strategic storage by next year. That will amount to 80,000 extra barrels of oil purchased per day,” according to Stansberry & Associates Investment Research report.

The meeting discussed the possibility of increasing imports from Venezuela, Brazil and Ecuador.

While India bought 12 million tonnes of crude during 2009-10 from Venezuela, Brazil and Ecuador, it purchased 96 million tonnes from West Asia and another 33 million tonnes from Africa.

It also discussed effective measures of demand management to control the consumption of petroleum products.

Source : telegraphindia.com