India receives first UAE crude cargo for Mangalore strategic reserve
22 May 2018
India on Monday received the first cargo of UAE crude oil for storing at one of the two Strategic Petroleum Reserve (SPR) caverns built by Indian Strategic Petroleum Reserve Ltd (ISPRL) at Mangalore.
Earlier, on 12 May, India’s minister of petroleum and natural gas and skill development and entrepreneurship Dharmendra Pradhan and UAE minister of state and ADNOC Group CEO Sultan Al Jaber had jointly initiated the filling of the crude oil carrier vessel MT Inspiration with 2 million barrels of crude oil belonging to Abu Dhabi National Oil Company (ADNOC).
In February 2018, during the visit of Prime Minister Narendra Modi to UAE, ISPRL and ADNOC signed an agreement under which ADNOC will store about 5.86 million barrels of crude oil in India’s SPR facility at Mangalore at its own cost. The filling up began with the 2 million barrels reaching Mangalore today. ADNOC will bring additional crude oil and fill up the Mangalore cavern later this year.
ADNOC’s filling of crude oil in the Indian SPR facility is the first private foreign entity investment in an Indian SPR cavern. The government of India under phase I of SPR programme has built crude oil storage facilities with total capacity of 5.33 million tonnes (around 39 million barrels) at three locations, viz, Vishakhapatnam, Mangalore and Padur.
Vishakhapatnam storage has a capacity of 1.33 million tonnes (around 9.77 million barrels) of crude oil, Mangalore has a capacity of 1.5 million tonnes (around 11 million barrels) and Padur can stock 2.5 million tonnes (18.37 million barrels). The entire Vishakhapatnam facility and one of the two caverns at Mangalore facility have been filled with crude oil under government funding, the second cavern at Mangalore facility is now being filled by ADNOC of UAE at its own cost under the agreement with ISPRL.
The agreement stipulates that during emergency oil shortages, the Indian government can use the entire available crude oil stored by ADNOC in the Mangalore SPR facility for its use. Further, as an incentive for storing crude oil at its own cost, the agreement allows ADNOC to sell part of the crude oil to Indian refineries during normal times.
The first cargo from UAE for filling up India’s SPR facility elevates the bilateral relationship between India and the UAE to a comprehensive strategic partnership and transforms it to a two-way investment relations.
UAE is the sixth-largest crude oil source for India and supplies around six per cent of the petroleum requirement. Indian oil companies have also recently acquired 10 per cent stake in UAE’s Lower Zakhum offshore producing field.