This was one of the three mega projects unveiled by Modi at a ceremony held here.
The Prime Minister also inaugurated Oil and Natural Gas Corp Ltd's Vashishta and S1 development project which has come up at Amalapuram in the Krishna-Godavari Offshore Basin.
The cost of the project is about Rs 5,700 crore. This project will contribute significantly in realising the Prime Minister's vision of reducing oil imports by 10 per cent by 2020, officials said.
Modi also laid the foundation stone for setting up Bharat Petroleum Corp Ltd (BPCL) Coastal Installation Project at Krishnapatnam. The project, coming up over 100 acres, will be built at an estimated cost Rs 580 crore.
The project will be commissioned by November 2020. Fully automated and state of the art, the Coastal Installation Project will ensure security of the petroleum products.
Speaking on the occasion, Modi said these projects were important not just for Andhra Pradesh but for the energy security of the entire country.
He said the government was building oil reserves at different places so that the country faces no shortage of gas, petrol and diesel in emergency situations.
"Work is on to ensure that if necessary the country's petroleum related requirements are met for nearly a month," he said.
Modi said these projects would not only provide direct employment to youth but also give fillip to gas-based industry.
The Prime Minister said the government was trying to develop all coastal areas of the country as petroleum hubs.
He said the work of providing free LPG connections to the poor, Dalits and tribals was progressing at a fast space.
He also said that under Ujjwala scheme, 6.25 crore free connections were provided.
The Prime Minister mentioned that LPG connections in the country started in 1955. In 60 years 12 crore connections were given but in the last four-and-half years 13 crore new connections were provided.
"In 2014, only 55 per cent people of the country had gas connection and this has now gone up to 90 per cent," he added.
Andhra Pradesh and Telangana Governor E.S.L. Narasimhan and Union Minister of Commerce and Industry and Civil Aviation Suresh Prabhu were present on the occasion.