Oil pacts with Abu Dhabi big boost to India’s energy security: Pradhan

14 Feb 2018


The signing of the concession agreement between an Indian Consortium and Abu Dhabi National Oil Company (ADNOC) for a 10 per cent stake in Lower Zakum Offshore oil field, and the agreement between Indian Strategic Petroleum Reserves Ltd (ISPRL) and ADNOC to operationalise the filling up of a strategic petroleum reserve cavern in Mangalore will give a big boost to India's energy security, petroleum minister Dharmendra Pradhan has said.

India is already the third-largest consumer of energy in the world, the third-largest importer of oil and the fourth-largest importer of gas. And with an economy that is expected to grow more than five-times its current size by 2040, India's energy demand is forecast to grow by more than any other country in the period to 2040, accounting for one-third of total incremental energy demand growth, Pradhan pointed out.

This, he said, also provides for an ideal setting for India and the UAE to strengthen its hydrocarbon engagement.

The concession agreement awards 10 per cent participating interest in Abu Dhabi's offshore Lower Zakum oil field to a consortium of Indian public sector companies comprising ONGC Videsh, IOCL and BPRL. The agreement, signed at the Royal Palace in Abu Dhabi on 10 February in the presence of Prime Minister Narendra Modi and Sheikh Mohamed bin ZayedAl Nahyan, Crown Prince of Abu Dhabi, is effective 9 March 2018.

The first Indian upstream investment in a producing asset in the Gulf region and in the Middle East, the offshore concession has taken India-UAE bilateral engagement in the oil and gas sector from a buyer-seller relationship to an era of mutual investments in the oil and gas sector, Pradhan pointed out.

UAE continues to be an important supplier of crude, LNG and LPG to Indian market. UAE is the fifth-largest import source and accounts for about 6 per cent of India's total crude imports. UAE is also India's third largest source of LPG and POL.

Current production at the offshore Lower Zakum oil field stands at 400,000 barrels per day and this is expected to peak at 450,000 barrels per day by 2025. Indian share of oil will be 10 per cent, ie, about 2.24 MMTPA at peak production.

Average share for India will be 1.75 MMTPA for next 40 years. Total cumulative share of the Indian consortium will be 70 MMT over the next 40 years, Pradhan stated.

The concession agreement will directly boost India's energy security. India's 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.

India's participation in the upstream project 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, Pradhan added.

Besides, he said, under the agreement signed with Indian Strategic Petroleum Reserves Ltd (ISPRL), ADNOC will invest about $400 million in the strategic crude oil storage facility in Mangalore by way of storing crude in one ISPRL underground rock cavern in Mangalore of capacity 5.86 million barrels (0.81 MMT) The period of storage will be 3 years with automatic extension of 2+2 years.

UAE will be the first country, which will participate in India's Strategic Petroleum Reserves Programme. It is befitting that a strategic partner like the UAE is also India's valued partner in the area of SPR, he added.

The oil storage facility will help boost India's energy security, while enabling ADNOC to efficiently and competitively meet market demand in India and across the fast developing Southeast Asian economies.

The initial Oil Storage And Management Agreement was signed in January 2017, during the state visit by Sheikh Mohamed bin Zayed to India as chief guest at India's Republic Day celebrations.

With the Lower Zakhum acquisition, Indian oil and gas PSUs have investments in 27 countries, which include the joint acquisition by ONGC Videsh, IOCL, BPRL and Oil India Ltd of a 49.9 per cent stake in Vankor oil field and a 29.9 per cent interest in Tassyurakh – both in Russia - at an investment of $5.5 billion. These have given India 15 MMTOE of equity oil, which is about 40 per cent of our annual domestic production.

Business History Videos

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

Vijay Mallya’s Kingfisher Ai...

It is about Kingfisher Airlines, a company that once soared...

By Aniket Gupta | Presenter: Sheetal Gaekwad

view more