War forces oil Cos to order more stocks

timesofindia.indiatimes.com SANJAY DUTTA TIMES NEWS NETWORK[ WEDNESDAY, FEBRUARY 26, 2003 12:15:41 AM ]

NEW DELHI: State-owned oil companies have placed advance orders for two months' supplies of crude oil from countries that have shipping routes beyond the Middle-East to guard against disruption in case of an US attack on Iraq.   "These contracts are in addition to the two months' stocks already being maintained by the refineries," oil minister Ram Naik, who completed 25 years in public office on Tuesday, told Times News Network.   Declining to name the countries on the ground that these were part of a sensitive "contingency plan", Naik said, "We are ready for any eventuality".   Ministry sources said the new oil sourcesinclude Brazil and Venezuela in South America, Russia as well as Angola, Nigeria and Libya in Africa.   "The idea is to tap countries from where oil tankers can sail without passing through the danger zone," one official said.   Middle-East countries at present account for one-third of India's oil imports, estimated at 70 million tonnes a year. The country needs roughly 105 million tonnes of oil a year, with only 30 per cent coming from domestic production.   India has in place term contracts with most of the Middle-East countries like Saudi Arabia (7.5 million tonnes), Iraq (1.5 mt), Kuwait (3.5 mt) and Iran 4 mt). It also has contracts with Yemen, Abu Dhabi and Qatar.   At present companies stock crude oil for 23 days (including 11 days of stocks in transit), petrol for 53 days, diesel 43 days, kerosene 51 days, cooking gas 19 days and jet fuel for 88 days.   The country needs 10 million tonnes of petro-products every month, while domestic monthly production is estimated at 3 million tonnes.   Naik said the oil companies were keeping their tanks topped up since last year's escalation with Pakistan. During this time, these firms are estimated to have spent Rs 1,100 crore on maintaining the inventory. However, some of it had been offset as they made money on initial stocks, which they had bought cheap, as international prices rose subsequently.   Naik said the possibility of war in Iraq, strike by oil workers in Venezuela and winter demand in the West had contributed to the surge in international crude prices which have breached the $36 a barrel-mark. "This has forced domestic prices to rise," he said.