India’s strategic oil reserves are set to be used by a
foreign player for the first time, with a carrier of Abu Dhabi National Oil
Company (Adnoc) likely to reach Mangalore port by May 21.
Petroleum Minister Dharmendra Pradhan along with Abu
Dhabi National Oil Company (Adnoc) CEO Dr Sultan Al Jaber flagged off the first
consignment of Adnoc crude that will be stored in India’s Strategic Petroleum
Reserves at Mangalore.
According to a tweet by Pradhan on Saturday 12 May
2018, 2 million barrels of crude from Abu Dhabi has set sail for India’s
Strategic Petroleum Reserves (SPR).
vessel ‘New Inspiration’ carrying 2 million barrels of crude for Mangalore
cavern to build India’s emergency stockpile is a true inspiration for enhanced
energy engagements between the two countries,” Pradhan tweeted, according to a
local media report.
He also said, “India looks towards UAE as a preferred
partner in further developing oil & gas infrastructure in the country. Ease
of doing business, opening up of Indian E&P sector due to policy reforms
& a stable govt. makes India a profitable investment destination in the oil
& gas sector.”
Adnoc is expected to store crude oil worth Rs 40-50
billion, based on prices in February, when the deal was signed. The company had
signed a contract with the government to fill 0.75 million tonnes (mt) of space
in the Mangalore strategic oil reserves cavern.
Other global majors, including Kuwait Petroleum Corp,
had also shown interest in investing in the country’s strategic caverns. “Adnoc
will fill one of the two compartments of the cavern, while oil marketing
companies will use the second compartment,” an official close to the
India has three underground rock caverns at
Visakhapattanam, Mangalore and Padur with oil storage capacity of 1.33 mt, 1.5
mt and 2.5 mt, respectively.
Pradhan to flag off UAE carrier with 2 million barrels
of crude oil today.
Strategic reserves were conceptualised to be used in
case of volatility in the international market. At present, India has overall
oil storage capacity of 66 days, and the strategic reserves will add another 10
days. The second set of strategic caverns is being planned at Chandikhol in
Odisha and through an extension at Padur. “The Cabinet is likely to clear the
second phase of the project soon,” he added.
The project is being implemented by a special purpose
vehicle, Indian Strategic Petroleum Reserves Ltd. It is in talks with private
players and global firms for participation in the second phase.
At present, India has an overall refining capacity of
247.6 mt, which is expected to rise to 414.35 mt by 2025. The country is the
third-largest consumer of crude oil, and 80 per cent of its energy requirements
are met through imports. According to the deal, India will have 65 per cent
right over the crude oil that Adnoc will store in Mangalore, while the foreign
company will be allowed to use the remaining 35 per cent for commercial