The Abu Dhabi National Oil Company (ADNOC) on Friday sent the first cargo vessel with two million barrels of crude oil for India's strategic petroleum reserve (SPR).
The consignment carrying two million barrels of crude is anticipated to reach ISPRL Mangalore on May 21.
This will be the first such investment by any foreign company in an Indian SPR facility.
ISPRL has constructed Strategic Petroleum Reserves (SPR) at Mangalore consisting of two "U" Shaped compartments with a total storage capacity of 1.5 MMT. One compartment has already been filled with crude oil through funds made available by the Government of India. The other compartment will be filled by crude supplied by ADNOC.
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
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On February 10, 2018, H.P.S. Ahuja, the CEO and MD of ISPRL signed the agreement with ADNOC for storing 5.86 million barrels of crude at their strategic storage facility in Mangalore during the visit of Prime Minister Narendra Modi to the UAE in February.
ADNOC will use part of the crude oil to supply its customers, while the rest will remain as strategic storage for the Government of India to be released in the event of an emergency, such as supply disruptions due to natural disasters or geopolitical factors.
The seeds of the alliance between India and the UAE were sown on January 25, 2017, during the state visit of Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi to India as the chief guest for the Republic Day celebration, when an agreement on Oil Storage and Management was signed between ISPRL and ADNOC.
Speaking on this historic moment, Dharmendra Pradhan complimented ISPRL and ADNOC for the tie-up and said it will go a long way in strengthening the bilateral relations between the two nations. He said that the building up of strategic reserves of India will ensure the energy security for India.
Together with national security, public safety, food, water and shelter, Energy security has become one of the basic needs that every government must provide to its people. Taking this into account, the Government of India entrusted Indian Strategic Petroleum Reserve Limited (ISPRL) with the task to build and operate the strategic crude oil reserves to serve as a back-up during any external supply disruptions.
Pradhan further said that the Centre is considering creating more such strategic storages for which investment by foreign oil companies is welcome.
CEO MD of ISPRL Ahuja said that the agreement was the beginning of a new chapter in charting the story of India's strategic reserves.
Further elaborating on the creation of strategic reserves in India he said that the Government of India started the construction of underground crude oil caverns in 2008 to store 5.33 million metric tonnes (MMT) of crude oil in three locations, Visakhapatnam (1.33 MMT), Mangalore (1.5 MMT) and Padur (2.5 MMT).
These engineering marvels were created by a team of Indian engineers. A total of 30 km of tunnelling was undertaken to construct these huge underground cavities. These cavities are as high as a ten storied building created at a depth of 60-70 metres below the mean sea level. This activity involved a total excavation of 220 lakh tons of hard rock.
The rock debris generated by ISPRL could fill 43 football fields to a height of over 100 feet or alternatively could be used for creating a four-lane highway from Mumbai to Delhi. More than 3,75,000 cubic meters of concrete and shotcrete was used which is more than the concrete used in the construction of Burj Khalifa in Dubai, the world's tallest building.
Underground storage of hydrocarbons is not only more secure, safe and economical than above-ground storage, but also has several environmental and operational advantages and also have a very low maintenance cost.
Pradhan complemented the teams of ISPRL and ADNOC for burning the midnight oil to arrive at a consensus for the agreement and wished for many more such alliances in future between India and the UAE in the oil and gas sector.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)