The Union Cabinet has approved signing of the Definitive Agreement on Oil Storage and Management between Indian Strategic Petroleum Reserve Ltd (ISPRL) and UAE’s Abu Dhabi National Oil Company (ADNOC).
Government’s this move aims at boosting India’s energy security by ensuring a strategic storage flow in for crude oil, from a government firm in Abu Dhabi for meeting unexpected future exigencies.
According to the Agreement
- ADNOC will fill up 0.81 MMT or 5,860,000 million barrels of crude oil at ISPRL storage facility at Mangalore, Karnataka.
- Out of the crude stored, some part will be used for commercial purpose of ADNOC, while a major part will be purely for strategic purposes.
- The investment by ADNOC is a major investment from UAE under the High Level Task Force on Investment (HLTFI). It is also first investment by UAE in India in the energy sector.
India being fastest growing economies and world’s third-biggest oil consumer, is building emergency storage in underground caverns to hold 36.87 million barrels of crude. It is equivalent to about 10 days of its average daily oil demand. This move aims to hedge against energy security risks as it imports most of its oil needs.