Indian energy sector runs for cover as Cyclone Phailin closes in

The cyclone is headed for the eastern coast of the country and is expected to be on a par with the strength of Hurricane Katrina.

Waves crash onto the shore at a fishing harbour in Visakhapatnam district in the southern Indian state of Andhra Pradesh as Cyclone Phailin closes in. R Narendra / Reuters

India’s energy industry was among the sectors bracing for a fallout from the onset of a cyclone comparable to Hurricane Katrina scheduled to hit the eastern coast of the country yesterday, as firms diverted oil and gas shipments to safer locations

Businesses in Odisha and Andhra Pradesh shut shop as hundreds of thousands of people fled the areas, while fisherman were advised not to venture out to sea and ships were moved away from the coast in anticipation of devastation from the storm, Cyclone Phailin, which was expected to be half the size of India.

Oil and gas companies stockpiled crude and liquefied natural gas, with India being heavily reliant on imported fuel, while domestic crude supplies are normally shipped to refineries on the east coast.

“We are monitoring the situation along with other government departments including the weather and the port authorities,” Veerappa Moily, India’s oil minister, told The Wall Street Journal.

Paradip Port Trust, the country’s largest dry bulk cargo facility, in Odisha, shut down its operations and moved its ships out to sea.

The Vizag port in Andhra Pradesh on the east coast, where the container terminal is partly owned by Dubai’s DP World, still had ships docked at port yesterday afternoon and was not expected to be badly affected by the cyclone, a source at a commercial weather services company in the UK said. The port had set up an emergency control room, according to its chairman, RPS Kahlon.

The government shut hotels and moved tourists in coastal areas of Odisha, The Times of India reported. Prices of potatoes and candles soared on Friday on panic buying as stocks were depleted, according to the report.

Power cuts and disruptions to trains are expected, while flights were being diverted across different paths.

India produces about 10 per cent of its rice exports in Odisha. About 20 per cent of the state’s rice crops could be damaged by the cyclone, said David Streit, a senior forecaster for Commodity Weather Group in Maryland. With the crops almost ready for harvesting, damage from the storm could result in a loss of 2 per cent of India’s rice, he said.

“Fortunately for cotton, peanut, soybean, corn, wheat and other crops, the storm damage is likely to stay to the north-east of the main growing areas,” he added.

While “cane crops in Odisha may be devastated, considering the size of the India’s production area, it won’t mean much to the total harvest,” according to Drew Lerner, the president of World Weather in Kansas. “Rice areas in Madhya Pradesh may get a lot of rain when the storm makes landfall, but that’s not uncommon in that region, so we don’t expect a lot of damage.”

* with Bloomberg