8 June, 2018
India which imports more than 80% of its crude oil requirement, received its first cargo of Murban crude last month from Abu Dhabi National Oil Co (ADNOC) of Unites Arab Emirates (UAE) for its strategic reserves. The cargo was loaded from Abu Dhabi and reached underground caverns near Mangalore late in May. State-owned Indian Strategic Petroleum Reserves Ltd manages (ISPRL) three major storage facilities in the southern and eastern parts of India. The underground storage facility near Mangalore will store 5.86mil barrels of ADNOC crude.
ISPRL operates three crude oil storage facilities constructed in underground rock caverns in Vashakhapattanam, Mangalore and Padur with total storage capacity of 39mil barrels of crude oil. Crude oil from these caverns can be supplied to Indian refineries, either through pipelines, or through a combination of pipelines and ships.
ADNOC will be able to sell a part of its Murban crude from the storage to Indian refiners. However, India will have the first rights to the stored crude in case of an emergency. SABIC of Saudi Arabia too was apparently keen to store its crude in the strategic reserves of ISPRL.
ndian government had been criticized for not taking enough initiatives to increase its strategic petroleum reserve capacity when crude oil prices were below $50 for a long period. While leading importers like China and the US have strategic reserves up to 60 to 90 days, India has strategic crude oil reserves only between 10 to 20 days. The strategic reserves capacity matters more to a country like India which continuously faces strained relations with its neighbors and where domestic production of oil and gas has been on the decline for a long time. In 2017, the Indian Ministry of Petroleum and Natural Gas (MoPNG) had invited expression of Interest (EOI) from companies interested in filling strategic reserves at the three locations. Six companies, namely BP, Shell, Goldman Sachs, Trafigura, Mangalore Refinery and Petrochemicals Ltd (MRPL) which is part of ONGC, and Hindustan Petroleum Corp (HPCL) had expressed interest in filling strategic reserves in caverns with crude oil. No final decision was taken on the selection of partners for filling caverns till end of the first quarter of calendar year 2018 due to the complexities involved in tax-related matters and commercial issues.