Indian oil reserves in Mangalore are expecting first ever crude oil shipment from Abu Dhabi National Oil Company (ADNOC) and fill up half of the 1.5 million tonnes strategic oil reserves in Mangalore.
Days after PM Modi’s trip to UAE, Oil Minister Dharmendra Pradhan signed an agreement with the Abu Dhabi National Oil Company (ADNOC) under which, ADNOC will use half of the underground storages build at Mangalore as a part of emergency stockpile. As per the deal, ADNOC will send out three large shipments of crude oil to fill up half of the 1.5-million tonne capacity oil reserve located in Mangalore. ADNOC will start filling the consignment for Mangalore in April as they are booked for next couple of months, after which, it would take three very large crude carriers (VLCCs) to fill 5.86 million barrels or 0.75 million tonnes of space it has taken in Mangalore. The storage will be filled by May this year, as per reports.
ADNOC had signed the deal to store crude oil in Indian strategic reserves, back in January 2017 but it was pending because of some tax incentives from the Indian government. Last week, the deal was ultimately finalised and ADNOC will spend about $400 million on 0.81 million tonnes, or 5.86 million barrels, of crude oil it plans to store at Mangalore cavern. The oil will be stored in India for three years, and an automatic extension of 2+2 years will be implied. This will fill up the Mangalore oil reserve as the Indian government had already filled up half of the cavern at Mangalore with its own resources. This will boost India’s strategic resource capabilities and gain foreign capital from the storage space.
Indian Strategic Petroleum Reserves Ltd (ISPRL) has built the Mangalore reserve as a part of its strategic oil reserve with a capacity of 39 million barrels located in Vizag, Mangalore and Padur. Currently, the total capacity of all three ISPRL reserves is 5.4 million tonnes, which can cover up India’s oil needs for 10 days in case of emergency or oil supply disruption. While inventories and refineries can get national oil require covered for 66 days. The agreement with ADNOC will help India in boosting its strategic oil storage income and a market presence in the competitiveness of the fast-developing South Asian countries.