Abu Dhabi National Oil Company (Adnoc) is expected to consume the maximum crude storage capacity available to it in November at India’s new strategic oil reserve in the southern coastal city of Mangalore, according to media reports.
Adnoc has so far filled two-thirds of its storage tanks, which in total account for 5.86 million barrels of storage capacity, at the state-owned Indian Strategic Petroleum Reserves Limited’s (ISPRL) Mangalore facility with its Das grade crude, Indian officials have been quoted as saying.
The Mangalore facility has a total storage capacity of 1.5 million tonnes or 10.95 million barrels.
The third very large crude carrier (VLCC) is set to arrive in a few days’ time, according to a senior official at India’s Ministry of Petroleum & Natural Gas.
The first VLCC from Abu Dhabi reached the underground storage facility located close to India’s Arabian Sea coastline, in May.
The two sides signed an initial agreement to set up the strategic crude storage project in January 2017 and affirmed it with a final agreement in February this year.
As part of that seven-year agreement, Adnoc has access to about half of the facility’s total storage space to store additional stockpiles of crude to be shipped to customers in Asia and elsewhere, as and when required.
India in return has the right to consume up to two-thirds of the Adnoc stockpile for free.
Meanwhile, the official said that the Mangalore facility’s remaining capacity has been filled up with Iranian crude. He added that Indian refiners had also placed crude import orders from Iran for the month of November.
India, which imports up to 80 per cent of its crude oil requirements, has completed building the first phase of its strategic reserve, having a cumulative capacity of 5.33 million tonnes or 39 million barrels.
The first phase of the storage project comprises the Mangalore facility and storage complexes in the coastal cities of Vishakhapatnam and Padur.
With oil demand in the country set to grow significantly in the coming years, due to a burgeoning population and rapid economic growth, New Delhi is looking to expand the strategic reserves project.
The Indian government is said to be tapping Middle Eastern producers, particularly Saudi Aramco and Adnoc, for the second phase of ISPRL’s storage project, which is estimated to cost $1.6bn.
When completed, the two phases of ISPRL combined with commercial storage at state refineries would hold oil equivalent to about 64 days of India’s needs.