The United Arab Emirates’ Abu DhabiNational Oil Company (ADNOC) will start filling
strategic crude oil reserve at Mangalore from May, said
petroleum and natural gas minister Dharmendra Pradhan on 13 February ‘18.
ADNOC had signed an agreement to store crude oil in Indian petroleum reservoir
in January 2017 but was waiting for certain tax incentives from the Indian
government before beginning to fill the cavern. The tax incentive has now been
given to ADNOC, paving the way for filling the reserve, an official said,
without elaborating on the nature of concession.
India has built three strategic petroleum reserves at Vizag, Mangalore and
Padur with a combined capacity of about 5.4 million tonnes that can cover for
10 days of nation’s oil needs should there be a supply disruption. Inventory in
refineries and pipelines could provide for 66 days of country’s consumption.
The government has already filled the Vizag’s 1.33 million tonne cavern and
half of Mangalore’s 1.6 million tonne capacity using its own resources, and has
been looking to use foreign and private capital to fill the rest.
ADNOC will spend about $400 million on 0.81 million tonnes, or 5.86 million
barrels, of crude oil it plans to store at Mangalore cavern, an official
statement said. Period of storage will be 3 years with automatic extension of
2+2 years, as per the statement.
“The oil storage facility will help boost India’s energy security as well as
enable ADNOC to efficiently and competitively meet market demand in India and
across the fast developing Southeast Asian economies,” the statement said.