India is set to receive its first ever crude oil consignment for storing in the newly built strategic oil reserve at Mangaluru as India’s petroleum minister Dharmendra Pradhan and Abu Dhabi National Oil Company’s (Adnoc) chief executive officer Sultan Al Jaber will flag off the first vessel from the Persian Gulf country on Saturday.
The very large crude container (VLCC) headed for the Indian shore will be carrying 2 million barrels of crude oil, according to sources. India and Adnoc had in February 2018 signed an agreement wherein the latter agreed to fill 0.75 million tonne (MT) of crude oil at the Mangaluru facility which has a capacity of 1.5 MT.
It will take three such VLCCs to fill the agreed quantity given 5.86 million barrels is equal to 0.75 MT of crude oil. Adnoc will use a part of the stored crude oil for commercial purposes such as trading, though the major chunk will be for India’s strategic purposes. India has built a strategic reserve capacity of 5.3 MT across three locations — Vishakhapatnam (1.33 MT), Mangaluru (1.5 MT) and Padur (2.5 MT) — at a cost of `4,098 crore and established a company, Indian Strategic Petroleum Reserves (ISPRL), for the purpose.
ISPRL is a special purpose vehicle wholly owned by the Oil Industry Development Board under the ministry of petroleum and natural gas and has been assigned to develop and maintain underground caverns to store crude oil to mitigate shortages during supply disruptions. While India at present has storage capacity that can meet needs for 66 days, these three strategic reserves put together will be able to meet requirement for another 10 days. India imports over 80% of its crude oil needs.
Apart from Adnoc, India has also offered Saudi Arabia a stake in the country’s future strategic oil reserves during the visit of Pradhan’s Saudi Arabian counterpart Khalid al-Falih in late February, 2018.
Pradhan has also said that India will be building more caverns in the future and will approach the Union Cabinet soon for approval.
