Taking measures to ensure adequate LPG stockpile

Vol 6, PW 24 (12 Feb 03) Midstream & Downstream

THE OIL MINISTRY has learnt some valuable lessons from the blow-out at Reliance's refinery and the resultant disruption of LPG production.

Most important is that there should be continuous monitoring of the country's LPG stocks, "to avoid any embarrassing situation in the future." In time-honoured bureaucratic fashion, the ministry wants to do this by setting up a 'Standing Committee' headed by a senior bureaucrat, in this case additional oil secretary M.S Srinivasan.

Also, the ministry now considers it "vital" that India should maintain a minimum stock of between 300,000 and 350,000 tonnes of LPG, enough for about two weeks consumption, "to avoid a run-out of stocks" and to supply consumers across the country in times of scarcity. We are told most of this buffer stock should be stored as close as possible to the main consumption centres.

Maintaining such buffer stocks may also not be enough in "times of urgency". According to the ministry, the answer lies in giving "flexibility and nimbleness" to state oil companies so they can "line up imports as fast as private sector companies." If this is done, it may even be possible to keep buffer stocks lower than 300,000 tonnes.

Instead of relying too much on imports, oil companies could be asked to further increase their LPG production facilities. As for Reliance, Shastri Bhawan wants to introduce amechanism to ensure it doesn't default on its monthly and annual production commitments set out in the Oil Economy Budget.

"Reliance may be asked to maintain certain minimum LPG stocks within their refinery tanks and storage facilities," adds the ministry.