India signs pact with Abu Dhabi oil firm

India signs pact with Abu Dhabi oil firm
Highlights

India on Monday signed an initial pact to lease out a part of its underground strategic oil storage at Padur in Karnataka to Abu Dhabi National Oil Co ADNOC for storing crude oil, the second such deal with the UAE firm this year, Oil Minister Dharmendra Pradhan said

New Delhi: India on Monday signed an initial pact to lease out a part of its underground strategic oil storage at Padur in Karnataka to Abu Dhabi National Oil Co (ADNOC) for storing crude oil, the second such deal with the UAE firm this year, Oil Minister Dharmendra Pradhan said.

India has built 5.33 million tonne (MT) of emergency storage -- enough to meet its oil needs for 9.5 days, in underground rock caverns in Mangalore and Padur in Karnataka and Visakhapatnam in Andhra Pradesh. It has allowed foreign oil companies to store oil in the storages on condition that the stockpile can be used by New Delhi in case of an emergency. ADNOC had in February this year signed a pact to fill half of the 1.5 MT strategic oil storage at Mangalore.

On Monday it signed a similar pact for Padur. "ISPRL (Strategic Petroleum Reserve entity of India) and ADNOC of UAE signed MoU to explore possibilities of ADNOC investment in filling up of crude oil in Padur strategic reserve in Karnataka," Pradhan, who is in Abu Dhabi for the agreement signing, tweeted.

The agreement allows ADNOC to sell or trade crude oil storage in the storages to local refiners but give Indian government the first right to the oil in case of an emergency. "ADNOC signs MoU with the Indian Strategic Petroleum Reserves Ltd (ISPRL), to explore storage of crude oil at Padur underground facility in Karnataka, which has a 2.5 MT (about 17 million barrels) capacity," the UEA firm tweeted.

Official sources said the pact followed the Cabinet's last week decision of approving filling up of the underground strategic oil storage at Padur by foreign oil companies. While a third of the Visakhapatnam facility has been hired by Hindustan Petroleum Corp Ltd (HPCL), ADNOC and government of India filled the storage at Mangalore.

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