India offers underground strategic oil storage to Abu Dhabi
ADNOC had in February this year signed a pact to fill half of the 1.5 MT strategic oil storage at Mangalore. On Monday it signed a similar pact for Padur.
- Country:
- India
- United Arab Emirates
India Monday signed an initial pact to lease out a part of its underground strategic oil storage at Padur in Karnataka to Abu Dhabi National Oil Co (ADNOC) for storing crude oil, the second such deal with the UAE firm this year, Oil Minister Dharmendra Pradhan said.
India has built 5.33 million tonnes (MT) of emergency storage -- enough to meet its oil needs for 9.5 days, in underground rock caverns in Mangalore and Padur in Karnataka and Visakhapatnam in Andhra Pradesh. It has allowed foreign oil companies to store oil in the storages on condition that the stockpile can be used by New Delhi in case of an emergency.
ADNOC had in February this year signed a pact to fill half of the 1.5 MT strategic oil storage at Mangalore. On Monday it signed a similar pact for Padur.
"ISPRL (Strategic Petroleum Reserve entity of India) and ADNOC of UAE signed MoU to explore possibilities of ADNOC investment in filling up of crude oil in Padur strategic reserve in Karnataka," Pradhan, who is in Abu Dhabi for the agreement signing, tweeted.
The agreement allows ADNOC to sell or trade crude oil storage in the storages to local refiners but give Indian government the first right to the oil in case of an emergency.
Official sources said the pact followed the Cabinet's last week decision of approving filling up of the underground strategic oil storage at Padur by foreign oil companies.
While a third of the Visakhapatnam facility has been hired by Hindustan Petroleum Corp Ltd (HPCL), ADNOC and government of India filled the storage at Mangalore. The 2.5 MT Padur facility remained empty.
Allowing foreign companies to use the storage for storing crude oil helps the government save on the cost of filling the reserves. Law and IT Minister Ravi Shankar Prasad had after the Cabinet meeting on November 8 said that allowing foreign companies to store oil in Padur would help the government save Rs 10,000 crore.
The Indian Strategic Petroleum Reserves Ltd (ISPRL) has constructed and commissioned underground rock caverns for storage of total 5.33 MT(around 39 million barrels) of crude oil at three locations -- Vishakhapatnam (1.33 MT), Mangalore (1.5 MT) and Padur (2.5 MT).
Padur storage has four compartments of 0.625 MT each and ADNOC may use half of the storage capacity for stocking its oil.
The total 5.33 MT capacity under Phase-I of the Strategic Petroleum Reserve (SPR) programme is estimated to supply about 9.5 days of India's crude requirement.
In Mangalore, it had agreed to stock 5.86 million barrels of 0.75 MT of oil.
In Phase-II, India plans to build an additional 6.5 MT facilities at Chandikhol in Odisha and Padur, which is expected to augment the emergency cover against any supply disruption by another 11.5 days.
Sources said oil firms like ADNOC could use the Padur storage to stock their oil and sell it to refineries in the region on commercial terms.
India, which meets 83 per cent of its oil needs through imports, will have the right of first refusal to buy the crude oil stored in the facilities in case of an emergency, they said.
Indian refiners maintain 65 days of crude storage, and when added to the storage planned and achieved by ISPRL, takes the Indian crude storage tally to about 87 days. This is very close to the storage of 90 days mandated by IEA for member countries.
ADNOC had last year given up its crude storage lease in South Korea and instead agreed to store oil at Mangalore in a bid to establish a ground presence in the world's third-largest oil consuming nation.
Out of the crude stored, apart would be used for commercial purposes by ADNOC, while a major part would be purely for strategic purposes.
The Visakhapatnam facility can meet two-and-half days need while Mangalore can meet 2.8 days requirement. Padur can meet 4.7 days requirement.
The Strategic Petroleum Reserves (SPR) at Mangalore consists of two compartments with a total storage capacity of 1.5 MT (11 million barrels). While one compartment has been filled with crude oil through funds made available by the government, the other compartment will be filled with crude supplied by ADNOC.
ADNOC hired the Mangalore storage just as it ended a contract to store 6 million barrels of crude oil at Korea National Oil Corp's Yeosu facility in the country's southwest coast.
South Korea had first right over the oil in the event of a supply emergency.
(With inputs from agencies.)
- READ MORE ON:
- Minister
- Ravi Shankar Prasad
- Government
- Government of India
- India
- Telangana
- Telugu language
- Dharmendra
- Andhra Pradesh
- Train
- Price
- Share
- The National
- United Arab Emirates
- Abu Dhabi
- Dharmendra Pradhan
- Strategic Petroleum Reserve (India)
- Visakhapatnam
- Hindustan Petroleum
- The National (Abu Dhabi)
ALSO READ
Centre stopped privatisation of Visakhapatnam Steel plant: BJP leader CM Ramesh
YSRCP candidate KK Raju files nomination papers in Visakhapatnam
Andhra CM Jagan Mohan Reddy's roadshow in Visakhapatnam receive a rousing welcome
Elections in Andhra: CM Jagan Reddy's 'Memanta Siddham' campaign bus traverses Visakhapatnam
Visakhapatnam Zoo Transfers White Tiger and Other Animals to Kolkata's Alipore Zoo