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In a first of its kind deal, the UAE’s national oil company, Adnoc, has agreed to store crude oil in India’s maiden strategic storage and give two-third of the oil to it for free.
India, which imports 79 per cent of its crude oil needs, is building 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.
The Abu Dhabi National Oil Company (ADNOC) is keen on taking half of the 1.5 million tonnes in the Mangaluru facility, Oil Minister Dharmendra Pradhan said on Wednesday.
It will stock 0.75 million tonnes or 6 million barrels of oil in one compartment of the Mangalore facility. Of this, 0.5 million tons will belong to India and it can use it in emergencies. Adnoc will use the facility as a warehouse to trade its oil.
10-day supply The 1.33-million-tonne Visakhapatnam storage and 2.5-million-tonne Padur stockpile together with the 1.5 million tonnes in Mangaluru will be enough to meet the nation’s oil requirements for about 10 days. After talks with visiting UAE Minister for Energy Suhail Mohammed Al Mazrouei, Pradhan said tax issues remain to be sorted out before Adnoc can begin storing oil in Mangalore. The Congress-ruled Karnataka government has not yet agreed on waiving VAT on the crude oil imported for the strategic storage, which the UAE wants to use to stock oil when prices are low and supply to its customers when rates are good.
“This will be beginning of our strategic ties,” he said, adding that Prime Minister Narendra Modi’s visit to the UAE last August laid the foundation for closer cooperation.
UAE had then committed to invest $75 billion in India, and Pradhan showcased opportunities for that investment to Mazrouei on Wednesday. “We have offered them refinery projects, petrochemical plans, pipelines and LNG terminals for investment,” he said.
On offer was a 26 per cent stake for $700 million in ONGC’s about-to-be-commissioned petrochemical project in Dahej, Gujarat, and 24 per cent equity for $200 million in an expansion being planned by BPCL of its subsidiary Bina refinery in Madhya Pradesh.
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