Govt allows ADNOC to export crude oil stored in Indian strategic reserves
New Delhi: The Cabinet has permitted Abu Dhabi National Oil Company (ADNOC) to export crude oil it has stored in Indian strategic reserve and lowered the quantity of crude oil it must always keep in the emergency stockpile in a bid to make it commercially more attractive for the foreign investor.
ADNOC and Saudi Aramco, the two companies that have shown interest in filling Indian strategic reserves, have been demanding the freedom to re-export crude from Indian strategic reserves with the ambition to make India a regional crude storage hub from where they can serve neighbouring countries like Bangladesh and Sri Lanka.
“The modifications, including increase in commercial quantity for #ADNOC to 50%, re-exporting crude to third countries with the first right of refusal to Indian companies as well as coastal movement of crude from/to strategic petroleum reserve will enhance commercial viability of crude storage by #ADNOC,” the oil ministry tweeted after the Cabinet decision to modify the model under which the UAE’s Adnoc had stored 0.75 million tonnes of oil at a reserve in Mangalore.
The government has used its own funds to fill the balance capacity of 4.55 million tonnes of emergency stockpile.
Increase in commercial quantity for Adnoc to 50% means the company can trade half of 0.75 million tonnes at any time but can’t allow the stored quantity to slip below 50%. This would mean the government can have access to at least 50% of stored oil during a supply emergency, lower from the current 65%.
The modifications “will also encourage new investments in the strategic petroleum reserve programme,” the ministry said. The current set of strategic reserves are already filled but the new policy can help the government in attracting investors for the next set of reserves it is planning to build with the help of the private sector.
The Cabinet also approved post facto the release of Rs 3,874 crore to the oil ministry in April for filling of reserves.
The Economic Times 14-10-2020