ADNOC to fill up half of Padur strategic crude oil storage
GREATER NOIDA (UP): Abu Dhabi National Oil Company (ADNOC) has agreed to hire half of the 2.5 million tonnes underground strategic crude oil storage that India has built at Padur in Karnataka, making it second such deal by the UAE firm in the state.
Indian Strategic Petroleum Reserves Limited (ISPRL) CEO and Managing Director HPS Ahuja said ADNOC will store oil in two of the four compartments of 0.625 million tonnes (MT) each.
"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," he said on sidelines of the Petrotech 2019 conference here. India has built 5.33 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 the condition that the stockpile can be used by New Delhi in case of an emergency.
ADNOC had in February 2018 signed a pact to fill half of the 1.5 MT strategic oil storage at Mangalore. It signed an MOU for Padur in November 2018.
"The remaining half of Padur storage will be filled up by auctioning the space," Ahuja said.
ISPRL will shortly seek interest from oil companies and traders willing to store oil in the Padur facility, he said. Companies hiring the strategic storages can sell or trade crude oil stored in the underground rock carvens to local refiners, but gives Indian government the first right to the oil in case of an emergency.
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. The 2.5 MT Padur facility remained empty.
Allowing foreign companies to use the storage for storing crude oil helps the government save on the cost of filling the reserves. The ISPRL has constructed and commissioned underground rock caverns for storage of total 5.33 MT (around 39 million barrels) of crude oil at three locations Vishakhapatnam (1.33 MT), Mangalore (1.5 MT) and Padur (2.5 MT).