Abu Dhabi oil company hires India’s strategic oil storage

New Delhi, November 12 

India today 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 tonne (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.

“ISPRL (Strategic Petroleum Reserve entity of India) and ADNOC of the UAE signed an 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 allowing foreign companies to store oil in Padur would help the government save Rs 10,000 crore. — PTI

• 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 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 metric tonnes 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