India to share half of Padur strategic oil storage with ADNOC: report
12 November 2018
India plans to share half of the Padur strategic oil reserve site in Karnataka with Abu Dhabi National Oil Co (ADNOC), in a move that will facilitate the sale of ADNOC crude oil to local refiners in India, while also giving the government of India the first right to the oil in the case of an emergency.
Indian Strategic Petroleum Reserves Ltd (ISPRL) will sign an initial lease agreement with ADNOC today in the presence of oil minister Dharmendra Pradhan, a Reuters report quoting sources close to the development said.
While the agreement will allow ADNOC to store its crude at two compartments in the Padur strategic reserve site, India also will not have to pay for the imports while accessing the oil in emergencies, the report pointed out.
It will be the second such deal with ADNOC after ISPRL allowed the Abu Dhabi oil company to store oil at the Mangalore strategic storage in Karnataka.
“We will sign a memorandum of understanding with ADNOC to fill two compartments in Padur along the same lines as the Mangalore cavern,” said one source with direct knowledge of the matter, declining to be named ahead of an official statement.
The Padur site is located about 5 km (3 miles) from the southwest coast and 40 km from Mangalore Refinery and Petrochemicals Ltd’s refinery.
The signing of the agreement follows the union cabinet last week approving a plan allowing foreign oil companies to store oil in Padur’s strategic storage.
“Participation by foreign oil companies will significantly reduce budgetary support of government of India by more than 100 billion rupees based on current prices,” law minister Ravi Shankar Prasad told a news conference last week.
India, which relies on oil imports for meeting about 80 per cent of its total demand, has built emergency storages in underground caverns at three locations, with a capacity to hold 36.87 million barrels of crude, which works out to about 9.5 days of its average daily demand.