India today received the first shipload of crude oil from UAE for storage at the Mangalore underground strategic storage which will act an insurance in times of emergencies.
Indian Strategic Petroleum Reserve Ltd - a special purpose vehicle that build India's maiden strategic storages - had in February signed a contract with ADNOC to lease out part of the Mangalore storage.
Under the pact, ADNOC will store about 5.86 million barrels of crude oil at Mangalore storage at its own cost. "The filling up began with the 2 million barrels reaching Mangalore today," the statement said.
ADNOC will bring additional crude oil and fill up the Mangalore cavern later this year.
The investment by way of crude oil in Indian strategic petroleum reserve facility is the first time that a private entity is filling up an cavern.
India has in the first phase of strategic oil storage programme built underground facilities with total capacity of 5.33 million tonnes (around 39 million barrels) at Vishakhapatnam in Andhra Pradesh, Mangalore and Padur in Karnataka.
Vishakhapatnam storage has a capacity of 1.33 million tonnes (around 9.77 million barrels) of crude oil, Mangalore has a capacity of 1.5 million tonnes (around 11 million barrels) and Padur can stock 2.5 million tonnes (18.37 million barrels).
The entire Vishakhapatnam facility and one of the two caverns at Mangalore have been filled with crude oil under government funding. The second cavern at Mangalore facility is now being filled by ADNOC at its own cost under the agreement with ISPRL.
"The agreement stipulates that during an emergency, the Indian government can use the entire available crude oil stored by ADNOC in the Mangalore facility for its use. Further, as an incentive for storing crude oil at its own cost, the agreement allows ADNOC to sell part of the crude oil to Indian refineries during normal times," the statement said.
It went on to state that the first cargo from ADNOC demonstrated the commitment of both India and UAE in executing strategically important agreements in a time bound manner, thereby, further strengthening the strategic relationship between the two countries, particulary in the oil and gas sector.
UAE is the 6th largest crude oil source for India and supplies around 6 per cent of oil needs.
"With the recent acquisition of 10 per cent stake in UAE's Lower Zakhum offshore producing field by Indian public sector oil and gas companies and the investment by ADNOC in Indian strategic oil facility, the hydrocarbon sector engagements between India and UAE have transformed from buyer-seller relationship to strategic partners in the energy sector," it added.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)