Udupi : The Union Cabinet Wednesday gave an in-principle approval for building two strategic crude oil reserves including one at Padur (Udupi district) in Karnataka with 2.5-million tonne capacity. The move will insulate India from spike in global prices of crude oil, Finance Minister Piyush Goyal said.

The aggregate capacity of the second reserve will be 4 million tonnes and it will be set up at Chandikhol in Odisha. The two reserves will provide additional supply of about 12 days of India’s crude requirement.

“We are going to explore public-private partnership mode for execution of these underground caverns for which potential investors will be approached,” Goyal said, adding that the Cabinet has only accorded in-principle approval, while costs of the advanced design and engineering required would be worked out.

The terms and conditions would be determined by the petroleum ministry in consultation with finance ministry after conducting road shows to elicit requirements of market, including investors.

Under the strategic petroleum reserve–phase one programme, the government has built crude oil storage facilities with total capacity of 5.33 million tonnes at Visakhapatnam and Mangaluru.