Abu Dhabi National Oil Company (ADNOC) signed an agreement to fill up half of the crude oil storage at Padur in Karnataka.
HPS Ahuja, CEO and Managing Director of Indian Strategic Petroleum Reserves Limited (ISPRL) said ADNOC will store 0.625 million tonnes of oil in two of the four compartments of the 2.5 million tonnes underground strategic crude oil storage. Part of the stored crude oil will be used for commercial purposes while majority of the oil will be for strategic purposes.
“They signed a memorandum of understanding (MoU) in November last year and now they have agreed to take two compartment of 0.625 million tonnes each. A final agreement will be signed soon,” Ahuja said. “The remaining half of Padur storage will be filled up by auctioning the space.”
The 2.5 MT Padur facility remained empty while a third of the Visakhapatnam facility has been hired by Hindustan Petroleum Corp Ltd (HPCL). The 0.755 million tonnes Mangalore facility is also filled by ADNOC.
India built an emergency storage in the underground rock caverns of Mangalore and Padur in Karnataka and Visakhapatnam in Andhra Pradesh under the Strategic Petroleum Reserve(SPR) programme. The facilities, which can store 5.33 million tonnes of oil, can be availed by companies as a strategic storage. Companies can sell crude oil from these storages to local refiners; but in case of emergency, India have the first right to use the oil.
The Visakhapatnam facility can meet two-and-half days of India’s oil need while Mangalore can meet 2.8-day worth of oil requirement. On the other hand, Padur can meet 4.7-day worth of oil requirement.
India’s move to allow foreign companies to use the storage helps the government save on the cost of filling of the reserves. The storages also serve as India’s safety net in case oil supply disruption occurs.
Under the Phase-I of the SPR programme, a facility with a capacity to store 5.33 million tonnes of oilis estimated to supply about 9.5 days of India’s crude requirement during an emergency.
In Phase-II, an additional 6.5 million tonnes facilities at Chandikhol in Odisha and Padur will be constructed to cover any supply disruption for 11.5 days.
Last February 2018, ADNOC had signed an agreement to fill half of the 1.5 MT strategic oil storage at Mangalore. In Novemeber 2018, it also signed an MoU for Padur.