India has raised the size of the first phase of a planned strategic crude reserve by 33 per cent, a government source close to the project said yesterday, but may not complete the entire storage by its earlier 2010 target.
Ten consortia, including firms from Iran, Japan and Asian rival China, have been shortlisted to build the underground caverns, the source said.
“Last week, we took a decision to raise the capacity of [initial] storages to 1.33 million tonnes [9.75 million barrels],” the official, who did not wish to be identified, said.
He said the government hopes to award a final contract for the construction of the first-phase stores – to be built at Vishakapatnam (Vizag) in the southern Indian state of Andhra Pradesh – by mid-November. “Vizag storages should be built within a timeframe of 36 months – by December 2010,” the official said.
India for now plans to build a 36.65 million barrel reserve, and had previously targeted the end of 2010 for completion.
But the official said that may now “spill over” into 2011 as geological studies at two other sites were yet to be completed, possibly pushing back the tendering process.
Once completed, the planned total storage will be able to meet 15 days’ of domestic demand and will be used to hedge against volatility in international crude oil markets and feed domestic markets in case of short-term supply disruptions.
The first underground storages will house high sulphur crude oil, the processing of which is being targeted by refinery expansion in India in order to increase profit margins.
Asia’s third-largest oil consumer has said it eventually wants to double overall strategic capacity to 73.3 million barrels, with the involvement of the private sector, but has not given a time frame for this to materialize.
Ten of 13 consortia that submitted bids to build the Vizag storage facility have made it to a final shortlist, including those involving Iranian construction firm Tablieh and China’s Sinohydro Corp, the official said.
Tablieh and Sinohydro have joined forces with separate Indian construction firms, while Japan’s Taisei Corp and J-Power have submitted a joint bid.
Among the other bidders for the storage facility, South Korea’s Samsung Engineering & Construction Co has teamed up with German construction firm Alpine Bau Deutschland AG, while SK Engineering & Construction Co Ltd and Indian market leader Larsen & Toubro Ltd have made a joint bid.
Those rejected in the first round include a consortium of German mining services firm Dywidag-Systems International, Austrian firm Jager bau GmBH, and Gammon India.
Two Singaporean firms which bid alone – Leighton Contractors and Sembawang Engineering & Construction Pte Ltd – were also ruled out, the official said.