HPCL seeks crude oil storage space in south India

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State-run Hindustan Petroleum is seeking 2.20 million barrels of crude oil storage space in India's first such strategic facility to be built in the south, a senior company official said.

"It (storage) will be closer to shore. It is easy to pump crude from there for our (Vizag) refinery," HPCL's head of refineries K. Murli said late Wednesday.

He said the proposal to allow his firm to use strategic storage for captive use would require cabinet approval.

HPCL, which operates a 150,000 barrels per day (bpd) refinery at Vizag in Andhra Pradesh, is setting up a single- point mooring, a facility where very large crude carriers (VLCCs) can unload. It currently imports crude through smaller suezmax vessels.

India is building 36.65 million barrels of strategic crude oil storage at three locations in southern India, of which the first facility of 9.75 million barrels will be built at Vizag or Vishakapatnam in 2011.

The storage capacity at Vizag was raised by 33% from its initial 7.33 million barrels, and will have two compartments of 7.55 million barrels and 2.20 million barrels.

"We will store both sweet and sour crude in storage" Murli said, adding Vizag refinery has a storage capacity of over half million tonnes.

Separately, HPCL, which also runs a 110,000-bpd refinery in Mumbai, is considering a new plant, as its current facility cannot be expanded due to logistic constraints.

Murli said a decision on the plant's capacity and time frame for construction will be taken only after a feasibility study.

It was not clear whether HPCL would shut the existing Mumbai plant if it builds the new refinery.

"We are working out how it is to be done. It is not easy. ...but it's an interesting idea. We will get a feasibility study done by a third party," he said.

HPCL had earlier planned to set up an upto 300,000 bpd refinery and a petrochemical plant at Vizag together with state-run Oil India and GAIL, but due to revenue losses faced by the state refiner and general economic slowdown, the project was put on hold.

"Nothing has moved on that project," Murli added.