‘Adnoc, Aramco interested in India’s petroleum reserves venture’

UAE’s Abu Dhabi National Oil Company (Adnoc) and Saudi Arabia’s Saudi Aramco have shown interest in participating in the country’s strategic petroleum reserves programme, including in the second phase of the plan which aims to build two additional storage facilities with total capacity of 6.5 million tonne (MT) at Chandikhol in Odisha (4 MT) and Padur in Karnataka (2.5 MT), oil and gas minister Dharmendra Pradhan said on Wednesday.

The country’s existing strategic petroleum reserve facilities — located in Visakhapatnam (1.3 MT), Mangaluru (1.5 MT) and Padur (2.5 MT) — can provide for about 9.5 days of crude oil requirement as per the consumption pattern of FY20. State-run oil marketing companies (OMCs) can stock for another 64.5 days. The government is planning to increase crude and petroleum products storage capacity from the existing 74 days to 86 days.

“Taking advantage of low crude oil prices in April/May 2020, the strategic petroleum reserves have been filled to full capacity, leading to notional savings of approximately `5,000 crore,” Pradhan said responding to a question in the Rajya sabha. India imports close to 85% of its annual crude oil requirements, and the massive oil bill (it makes up for 21% of the country’s imports) is the biggest driver of the country’s trade deficit, and consequently current account deficit.

Adnoc has 50% of the Mangaluru storage capacity on lease since 2018, but was not allowed to re-export the stored crude as per the terms of the contract. However, in October 2020, the government allowed the company to export the crude oil stored by it in the Mangaluru storage tank.

According to sources, the government is looking for prospective partners like financial investors, foreign oil companies, and large construction firms to build the proposed oil reserves. There is also a possibility to enter into a concessionaire agreement with these partners for the construction, filling and operation of these facilities. The government is also exploring overseas crude storage facilities in the US and “other commercially viable locations”.