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Pradhan to flag off UAE carrier with 2 million barrels of crude oil today

India opens up strategic oil reserves for foreign companies

Shine Jacob  |  New Delhi 

Dharmendra Pradhan, Pradhan
Petroleum Minister Dharmendra Pradhan

India’s strategic oil reserves are set to be used by a foreign player for the first time, with a carrier of National Oil Company (Adnoc) likely to reach Mangalore port by May 21.

Petroleum Minister and his counterpart Ahmed Al Jaber, who is also the chief executive officer of Adnoc, will flag off a very large carrier with 2 million barrels of on Saturday, according to an official close to the development.

is expected to store worth Rs 40-50 billion, based on prices in February, when the deal was signed. The company had signed a contract with the government to fill 0.75 million tonnes (mt) of space in the Mangalore strategic oil reserves cavern.

“The first consignment from the oil terminal is likely to reach India on May 21 at Mangalore port. We are expecting two more consignments to come after the monsoon,” another official close to the development said. Other global majors, including Kuwait Petroleum Corp, had also shown interest in investing in the country's strategic caverns. “will fill one of the two compartments of the cavern, while will use the second compartment,” he added.

India has three underground rock caverns at Visakhapattanam, Mangalore and Padur with oil storage capacity of 1.33 mt, 1.5 mt and 2.5 mt, respectively.

Pradhan to flag off UAE carrier with 2 million barrels of crude oil today

Strategic reserves were conceptualised to be used in case of volatility in the international market. At present, India has overall oil storage capacity of 66 days, and the strategic reserves will add another 10 days. The second set of strategic caverns is being planned at Chandikhol in Odisha and through an extension at Padur. “The Cabinet is likely to clear the second phase of the project soon,” he added.

The project is being implemented by a special purpose vehicle, Ltd. It is in talks with private players and global firms for participation in the second phase.

At present, India has an overall refining capacity of 247.6 mt, which is expected to rise to 414.35 mt by 2025. The country is the third-largest consumer of crude oil, and 80 per cent of its energy requirements are met through imports. According to the deal, India will have 65 per cent right over the that will store in Mangalore, while the foreign company will be allowed to use the remaining 35 per cent for commercial purposes.


STRATEGIC TOP-UP

  • India has three underground rock caverns at Visakhapattanam, Mangalore and Padur
  • Adnoc signed a deal in February to fill 0.75 million tonnes of crude oil in Mangalore
  • The second phase of strategic reserves is being planned at Chandikhol in Odisha, and through an extension at Padur

First Published: Sat, May 12 2018. 07:02 IST
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