CHENNAI: India’s energy security is set to receive a boost over the next few months thanks to two agreements inked during Prime Minister Narendra Modi’s visit to the United Arab Emirates (UAE) last week. The first will see the UAE begin shipping crude oil consignments to fill up one half of India’s 1.5 million tonnes strategic reserve storage facility in Mangaluru beginning May.
Oil Minister Dharmendra Pradhan had on Saturday noted that the development would significantly increase the country’s crude oil storage capacity, particularly important for a net importer like India. “(We) currently have storage facilities that can meet the requirement for 66 days. These strategic storages can meet 10 more days of requirements,” Pradhan had said.
According to the agreement between Abu Dhabi National Oil Company (ADNOC) and the Indian Strategic Petroleum Reserves Ltd (ISPRL), ADNOC will invest about $400 million by way of storing crude in one of ISPRL’s underground rock caverns in Mangaluru, which has a capacity of 5.86 million barrels (0.81 MMT).
The oil stored in the underground rock caverns are to be used in an emergency, and ISPRL has built around 39 million barrels (5.33 million tonnes) of strategic crude oil storage at three locations -- Padur and Mangaluru on the western coast and Visakhapatnam on the eastern coast.
“The UAE will be the first country, which will participate in India’s Strategic Petroleum Reserves Programme,” Pradhan said, adding that the facility will help boost India’s energy security as well as enable ADNOC to efficiently and competitively meet market demand in India and across the fast developing south east Asian economies.
Meanwhile, the other agreement signed during the PM’s visit will enable a consortium of Indian oil majors (ONGC Videsh, IOCL and BPRL) to pick up a 10 per cent stake in ADNOC’s Lower Zakum Offshore oil field. According to Pradhan, the offshore concession in favour of the Indian consortium is expected to gain India around 1.75 million tonnes of production per annum for the next 40 years.
“Total cumulative share of the Indian consortium will be 70 MMT over the next 40 years,” the minister noted, “(This) will directly boost India’s energy security. The Indian share of 900,000 barrels of DAS Crude for March 2018 and 1.2 million barrels for April 2018 has already been offered by ADNOC. Participation will provide a valuable platform to Indian upstream companies to work alongside the international majors and thus expose them to the latest state-of-the-art technology and management practices.”