Indian Strategic Petroleum Reserve Ltd (ISPRL) has signed a deal with Hindustan Petroleum Corp to lease 300,000 metric tons of storage space for three years in a Strategic Petroleum Reserve (SPR) in Vizag in southern India.

ISPRL operates three SPRs in southern India with combined capacity of about 5 mln tonnes.

"In line with partial commercialisation policy of the government, we have leased out space to HPCL," Lakhpat Rai Jain, chief executive of Indian Strategic Petroleum Reserves said.

He said the contract with HPCL is for two years with a provision to extend it by one year.

The 1.03 million tonne SPR at Vizag is half filled with Iraqi oil. And after leasing of space to HPCL, there is scope to rent out the remainder 200,000 tonnes space, Jain added.

The federal government had announced 50 billion rupees ($602.71 million) support for ISPRL to fill the 750,000 storage in Mangalore. But that didn't materialise and no support was announced in the interim budget for next fiscal year announced last week.

Jain added that ISPRL will soon invite bids to lease out half of the 1.5 mln tonnes SPR in Mangalore, where one of the two equally sized compartments has been leased to UAE's ADNOC.

State-run ISPRL has been selling from the caverns to local refiners after a change in the government rules in 2021.

($1 = 82.9580 Indian rupees) (Reporting by Nidhi Verma, Editing by Louise Heavens)