India will have the right over 65 per cent of 6 million barrels of crude oil that Abu Dhabi National Oil Company (ADNOC) will store at the country’s maiden strategic storage at Mangalore.
ADNOC will send three large ships carrying crude oil beginning April to fill half of the 1.5 million tonnes strategic oil reserves that India has built at Mangalore, a senior government official said.
Out of the crude stored, 35 per cent can be used by ADNOC for commercial purposes, ie trading or selling to refiners whenever it wants. The remaining 65 per cent would be for strategic purpose of meeting India’s oil need during a contingency like supply disruption, he said.
“ADNOC will of course be paid for the oil if India were to draw from the reserves,” he said.
Indian Strategic Petroleum Reserves Ltd (ISPRL), a special purpose vehicle created by the government, has built around 39 million barrels (5.33 million tonnes) of strategic crude oil storage at three locations — Padur and Mangalore on the western coast and Visakhapatnam on the eastern coast.
Oil stored in the underground rock caverns at the three locations are to be used in an emergency and can meet the country’s needs for 10 days.
India, which imports over 80 per cent of its oil needs, is among the select league of nations that have built strategic storages to meet emergency needs.
While the Vishakhapatnam storage of ISPRL has a capacity of 1.33 million tonnes (9.77 million barrels) of crude oil, Padur can stock 2.5 million tonnes (18.37 million barrels). At Mangalore, oil is stored in two compartments with a total storage capacity of 1.5 million tonnes (11 million barrels), he said.
While one compartment has been filled with crude oil through funds made available by the government, the other compartment will be filled by crude supplied by ADNOC, he said.
ADNOC earlier this month signed an agreement to store crude oil at the Mangalore underground caverns during the visit of Prime Minister Narendra Modi to Abu Dhabi.
The Visakhapatnam facility can meet two-and-half days oil need of the country while Mangalore can meet 2.8 days requirement. Padur can meet 4.7 days requirement, he said.
India imports over 80 per cent of its crude oil needs, out of which about 8 per cent is supplied by the UAE.
ADNOC hired the Mangalore storage just as it ended a contract to store 6 million barrels of crude oil at Korea National Oil Corp’s Yeosu facility in the country’s southwest coast. South Korea had first right over the oil in the event of a supply emergency.
The official said it would take three very large crude carriers (VLCCs) to fill 5.86 million barrels or 0.75 million tonnes of space ADNOC has taken in Mangalore.moneycontrol