The UAE's national oil company Abu Dhabi National Oil Company (ADNOC) on 10 February 2016 agreed to store crude oil in India's maiden strategic petroleum storage. The strategic reserve will help guard against global price shocks and supply distribution.
The decision was taken during the state visit of Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces Sheikh Mohamed bin Zayed Al Nahyan to India from 10 February to 12 February 2016.
Main Highlights of Bilateral Meeting
• It will take half of the 1.5 million tonne (MT) Mangalore facility, that is, 0.75 MT (6 million barrels). ADNOC will use this facility as a warehouse for trading its oil.
• Out of 0.75 MT, ADNOC agreed to give two-third of the oil to India for free, that is, 0.50 MT will belong to India, which will be used in cases of emergencies.
• UAE will use to stock oil at Mangalore facility when prices are low and supply to its customers when rates are good.
Besides, India also offered UAE refinery projects, petrochemical plans, pipelines and LNG terminals for investment. These include:
• ONGC petrochemical project, Dahej, Gujarat: Offered 26 percent stake in 700 million US dollars project
• BPCL’s Bina refinery, Madhya Pradesh: offered 24 percent equity in 200 million US dollars project that seeks to expand the refining capacity from 6 million tons to 7.5 million tones
• HPCL’s petrochemical plant on Andhra coast: Offered 25-40 percent stake in 530-850 million US dollars project
• UAE can also invest in the planned 60 million tons in Maharashtra and the Jagdishpur-Haldia and Paradip-Surat gas pipelines.
Besides ADNOC, Kuwait Petroleum Corp (KPC) has also evinced interest in hiring a part of the maiden strategic storage.
About Indian Strategic Petroleum Reserves Limited
• To store about 5.33 million tonnes of crude oil as strategic reserve, India established a company Indian Strategic Petroleum Reserves Limited (ISPRL).
• ISPRL is a Special Purpose Vehicle and is a wholly owned subsidiary of Oil Industry Development Board (OIDB).
• The company is involved in managing the construction of underground storage at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka. Engineers India Limited (EIL) is the Project Management Consultant for all three projects
• 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.
Besides, India is looking at building four more strategic crude oil facilities at Bikaner in Rajasthan, Rajkot in Gujarat, Padur in Karnataka and Chandikhole in Jajpur district of Odisha.
India imports 79 percent of its crude oil needs out of which UEA makes up for 8 per cent of our oil imports.
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When: 10 February 2016