Mangalore Current Affairs

Strategic Petroleum Reserve: India receives first crude oil cargo from UAE for Mangalore reserve

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).

Background

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.

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