ADNOC Current Affairs - 2019
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ISPRL signs MoU with ADNOC to explore storage of crude oil at Padur underground facility in Karnataka
Indian Strategic Petroleum Reserves Ltd. (ISPRL) has signed Memorandum of Understanding (MoU) with Abu Dhabi National Oil Company (ADNOC) to explore storage of crude oil at Padur underground facility in Karnataka. This follows arrival of final shipment of initial delivery of ADNOC crude to be stored in another ISPRL underground facility in Mangaluru, which will store 5.86 million barrels.
ISPRL is Special Purpose Vehicle (SPV), which is a wholly owned subsidiary of Oil Industry Development Board (OIDB) under Ministry of Petroleum & Natural Gas.
The MoU mandates ADNOC to store crude oil at Padur Strategic Petroleum Reserve which has storage capacity 2.5 million-tonne (~17 million barrels) capacity for emergency needs. ADNOC will store crude in two compartments at Padur. ADNOC is only foreign oil and gas company, so far to invest, by way of crude oil in India’s strategic petroleum reserves program. This will help to ensure energy security to India and enable ADNOC to efficiently and competitively meet Indian market demand.
Under the Phase I of Strategic Petroleum Reserves Program, SPRL has already built 5.33 million tons of underground storage capacity at three locations, Visakhapatnam (1.33 million tons), Mangalore (1.5 million tons) and Padur (2.5 million tons), that can meet around 10 days of the country’s oil needs. In June 2018, Government announced phase II of program for creation of two new reserves, a 4-million-tons storage facility at Chandikhol in Odisha, and an additional 2.5-million-tons facility at Padur. The combined strategic reserve capacity of existing and newly announced facilities will be 15.33 million tons and will provide around 22 days of emergency coverage for India’s crude oil requirements.
India received first consignment of 2 million barrels of crude oil from United Arab Emirates (UAE) for its strategic petroleum reserve (SPR) at Mangaluru (on west coast), Karnataka. This first consignment from UAE fill one of two strategic reserve caverns at Mangaluru under agreement between Indian Strategic Petroleum Reserves Ltd (ISPRL) and Abu Dhabi National Oil Company (ADNOC).
Central Government under phase I of SPR programme had announced to build three underground crude oil storage facilities with total capacity of 5.33 million tonnes at Vishakhapatnam (Andhra Pradesh, storage capacity of 1.33 million tonnes), Mangalore (Karnataka, 1.5 million tonnes) and Padur (Kerala, 2.5 million tonnes) to provide energy security of 10 days of consumption in response to external supply disruptions. They are maintained by ISPRL, a special purpose vehicle (SPV), which is wholly owned subsidiary of Oil Industry Development Board (OIDB) under Ministry of Petroleum & Natural Gas.
Note: In 2017-18 budget, Government as part of phase 2 of SPR programme had announced to set up two more such SPR at Chandikhole (Odisha) and Bikaner (Rajasthan). This will take the strategic reserve capacity to 15.33 million tons.
During official visit of Prime Minister Narendra Modi to UAE in February 2018, ISPRL and ADNOC had signed 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 agreement made ADNOC first private foreign entity to store crude oil in Indian SPR facility. The agreement stipulates that during emergency oil shortage situation Indian government will use entire available crude oil stored by ADNOC in Mangalore SPR facility for its use. It also allows ADNOC to sell part of crude oil stored at its own cost to Indian refineries during normal times.
India-UAE Hydrocarbon relations
India is 82% dependent on imports to meet its crude oil needs. UAE is 6th largest crude oil source for India and supplies around 6% of petroleum requirement. India and UAE recently elevated their bilateral relationship to comprehensive strategic partnership especially in energy sector, transforming from buyer-seller relations to two-way investment relations. The relationship was further strengthen with recent acquisition of 10% stake in UAE’s Lower Zakhum offshore producing field by Indian public sector oil and gas companies and investment by ADNOC in Indian SPR facility.