In a first of its kind deal, UAE's national oil company Adnoc has agreed to store crude oil in India's maiden strategic storage facility and give two-third of the oil to it for free.
In a first of its kind deal, UAE's national oil company Abu Dhabi National Oil Company (ADNOC) has agreed to store crude oil in India's maiden strategic storage facility and give two-third of the oil to it for free.
India, which is 79% dependent on imports to meet its crude oil needs, is building underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tonnes of crude oil to guard against global price shocks and supply disruptions.
ADNOC) is keen on taking half of the 1.5 million tons Mangalore facility, Oil Minister Dharmendra Pradhan said on Wednesday.
It will stock 0.75 million tons or 6 million barrels of oil in one compartment of Mangalore facility. Of this, 0.5 million tons will belong to India and it can use it in emergencies. Adnoc will use the facility as a warehouse for trading its oil.
The 1.33 million tons Visakhapatnam storage and 2.5 million tons Padur stockpile together with 1.5 million tons Mangalore storage will be enough to meet nation's oil requirement of about 10 days.
After talks with visiting UAE Minister for Energy Suhail Mohammed Al Mazrouei, Pradhan said tax issue remains to be sorted out before Adnoc can begin storing oil at Mangalore.
Congress-ruled Karnataka government has not yet agreed on waiving VAT on the crude oil imported for the strategic storage, which UAE wants to use to stock oil when prices are low and supply to its customers when rates are good.
"This will be beginning of our strategic ties," he said, adding that Prime Minister Narendra Modi's visit to UAE in August last year, the first by an Indian Prime Minister in 38 years, laid the foundation of closer cooperation.
UAE had then committed to invest $75 billion in India, and Pradhan today showcased to Mazrouei opportunities for that investment.
"We have offered them refinery projects, petrochemical plans, pipelines and LNG terminals for investment," he said.
On offer was 26% stake for $700 million in ONGC's about-to-be-commissioned petrochemical project at Dahej in Gujarat and 24% equity for $200 million in expansion being planned by BPCL of its subsidiary Bina refinery in Madhya Pradesh from 6 million tons to 7.5 million tons.
Also, an investment of $530-850 million can get the UAE 25-40% stake in HPCL's planned petro-chemical plant on the Andhra coast, he said, adding that the Gulf national can also invest in the planned 60 million tons in Maharashtra and the Jagdishpur-Haldia and Paradip-Surat gas pipelines.
"UEA makes up for 8% of our oil imports. We are trying to import more oil from UAE. In 2016-17, we plan to import 2.5 million tons more oil than current year's purchase of 16.11 million tons," he said.
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