Contingency plan ready to avert oil shortage

With war breaking out in Iraq, the government on Thursday put forward a contingency plan to avert any shortage in the supplies of crude oil ...

With war breaking out in Iraq, the government on Thursday put forward a contingency plan to avert any shortage in the supplies of crude oil to the country. The plan will also involve efforts on the part of the government to shield consumers from any massive rise in the prices of international crude oil.

To ensure that domestic prices of petro products are kept within ‘reasonable’ limits, the government will also ensure that excise and customs duties on crude and petro products are cut if need be.

Talking to reporters, petroleum secretary B. K. Chaturvedi said “we have enough stocks to meet country’s oil demand for the next two months. There will be no shortage even if supplies from Iraq were disrupted.”

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Stating that the US-led war was unlikely to have any impact on India’s oil supplies, Chaturvedi said “our three-pronged contingency plan involves shoring up of stocks, ensuring continuous supplies at all places and seeing that retail prices are at reasonable level. We are constantly in touch with the finance ministry and (excise and customs) duties on crude oil and petroleum product would be cut if global crude oil prices rise.”

Among other steps, the government has asked domestic refineries and exploration and production companies to defer maintenance shutdowns by four months. Further, the war will only dry up the small quantity of oil exported by Iraq.

India imports only less than 5 per cent of its crude requirement of 78.7 million tonnes from Iraq and alternate arrangements have been made to meet that requirement. “Oil companies are shifting their spot purchases from countries outside the conflict zone like Malaysia, Nigeria, Egypt, Libya, West Africa and Red Sea,” Chaturvedi said. “If crude prices rise steeply, we may stop procurement and exhaust the current stockpile of close to 25 days,” the secretary said while anticipating that war in Iraq would be of short duration.

State-owned oil firms are maintaining 53 days of aviation turbine fuel (ATF) stock besides the 23 days of crude oil inventory available to provide for additional coverage of 34 days. Stock of petrol and diesel are enough to meet country’s requirement for 33 days while kerosene stock are sufficient for 29 days.

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Besides, processing the crude oil stocks would provide for additional product coverage of 39 days for petrol, 30 days for diesel and 27 days for kerosene, sources in petroleum ministry said. Further, oil firms have resorted to heavy imports of LPG to take the total inventory to 12 days.