Mangalore Emerges as Strategic Oil Reserve Point for Abu Dhabi

[Ministry of Petroleum & Natural Gas Press Release dated 21 May 2018]

In a first, on 21 May, India received the 1^st cargo of UAE crude oil for filling up one of the two Strategic Petroleum Reserve (SPR) caverns built by Indian Strategic Petroleum Reserve Ltd (ISPRL) at Mangalore. Earlier, on 12^th May, Dharmendra Pradhan, Minister of Petroleum and Natural Gas & Skill Development & Entrepreneurship and H.E. Dr. Sultan Al Jaber, UAE Minister of State and ADNOC Group CEO from Abu Dhabi jointly initiated the filling of the crude oil carrier vessel MT Inspiration with 2 million barrels of crude oil belonging to Abu Dhabi National Oil Company (ADNOC) of UAE.

In February 2018, during the visit of Prime Minister Narendra Modi to UAE, ISPRL and ADNOC signed an Agreement under which ADNOC will store about 5.86 million barrels of crude oil in India’s SPR facility at Mangalore at its own cost. The filling up began with the 2 million barrels reaching Mangalore today. ADNOC will bring additional crude oil and fill up the Mangalore cavern later this year.

ADNOC’s investment by way of crude oil in Indian SPR facility is the first time that a private foreign entity, is filling up an Indian SPR cavern with crude oil. Government of India under phase I of SPR programme has built crude oil storage facilities with total capacity of 5.33 million tonnes (around 39 million barrels) at three locations viz. Vishakhapatnam, Mangalore and Padur. 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 facility have been filled with crude oil under government funding, the second cavern at Mangalore facility is now being filled by ADNOC of UAE at its own cost under the Agreement with ISPRL. The Agreement stipulates that during an emergency oil shortage situation the Indian government can use the entire available crude oil stored by ADNOC in the Mangalore SPR 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 historic first cargo from UAE for filling up India’s SPR facility demonstrates 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, particularly in the oil and gas sector. It is a culmination of the vision of the leaders, HRH the Crown Prince of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan and Prime Minister Modi to elevate the bilateral relationship to a comprehensive strategic partnership and transform the buyer-seller relations to a two-way investment relations.

UAE is the 6^th largest crude oil source for India and supplies around 6 % of the petroleum requirement. With the recent acquisition of 10% stake in UAE’s Lower Zakhum offshore producing field by Indian public sector oil and gas companies and the investment by ADNOC in Indian SPR facility, the hydrocarbon sector engagements between India and UAE have transformed from buyer-seller relationship to strategic partners in the energy sector.