UAE has announced that India may lease a part of its planned strategic storage to state oil company Abu Dhabi National Oil Company (ADNOC)
India’s planned oil storages sites at Mangalore and Padur in Karnataka on the southwestern coast and Vizag in Andhra Pradesh on the eastern seaboard would together be able to hold 39mn barrels of oil.
India, said to be the world’s fourth largest oil consumer, imports about 80 per cent of its oil needs and is building emergency storage capacity to hedge against energy security risks, according to Reuters.
India had initially planned to fill the oil storage without overseas participation, but it is now drawn to deals similar to those that the ADNOC struck earlier with Japan and South Korea. The South Asian nation imports around 16mn tonnes of crude a month — more than it consumes — and exports about a third of that as refined products.
“Final details of the plan are yet to be worked out but ANDOC have said they can take up to two million tonnes capacity,” an Indian official said.
However, it is not clear when any deal with ADNOC might be finalised. Another government source said that a final deal with ADNOC hinges on tax breaks — including issues such as abolishing state entry taxes — and permission to re-export cargoes.
ADNOC, in 2013, had leased space to store six million barrels of oil in South Korea. South Korea has the first rights to the stored crude in case of emergency, while the deal allows ADNOC to move cargoes around the region to meet any shift in demand.
The UAE state firm was the fifth biggest crude supplier to India last year, according to Reuters data.
