Mangaluru, Jan 27, 2017: ADNOC, UAE’s national oil company, signed an agreement to hire half of the capacity of India’s maiden strategic oil storage at Mangaluru as the two nations looked to strengthen energy ties. India, which is 81 per cent dependent on imports to meet its crude oil needs, has built underground storages at Visakhapatnam in Andhra Pradesh and Mangaluru and Padur in Karnataka to store about 5.33 million tonnes of crude oil to guard against global price shocks and supply disruptions. ADNOC, Abu Dhabi National Oil Company will hire half of the 1.5 million tonnes Mangaluru facility, officials siad.
An agreement to this effect was signed between Indian Strategic Petroleum Reserves Ltd (ISPRL) - the special purpose vehicle building the oil storages, and ADNOC after talks between Prime Minister Narendra Modi and Abu Dhabi’s Crown Prince Sheikh Mohamed bin Zayed al-Nahyan.
"It is our hope that this strategic agreement will build on the strong bounds of cooperation between our two nations and provide the foundation for a mutually beneficial energy partnership," Oil Minister Dharmendra Pradhan said. The pact, he said, will also "help to ensure India’s energy security and enable us to meet the nation’s growing demand for energy".
Under the agreement, India will have first right to use the stored oil in case of an emergency, while ADNOC would use the facility to store oil for trading purposes. ADNOC will stock 0.75 million tonnes or 6 million barrels of oil in one compartment of Mangaluru facility. Of this, 0.5 million tonnes will belong to India and it can use it in emergencies. ADNOC will use the facility as a warehouse for trading its oil.
The 1.33 million tonnes Visakhapatnam storage and 2.5 million tonnes Padur stockpile together with 1.5 million tonnes Mangalore storage will be enough to meet nation’s oil requirement of about 10 days. The Congress-ruled Karnataka government has not yet agreed on waiving VAT on the crude oil imported for the strategic storage, which UAE wants to use to stock oil when prices are low and supply to its customers when rates are good.