ABU DHABI — The Abu Dhabi National Oil Company (ADNOC) signed Monday a Memorandum of Understanding (MoU) with the Indian Strategic Petroleum Reserves Ltd (ISPRL) to explore the possibility of storing ADNOC crude oil at ISPRL’s underground oil storage facility at Padur in Karnataka, which has a 2.5 million ton (17 million barrels) capacity. Under the MoU, ADNOC could store crude in two compartments at Padur.

The MoU with ISPRL, an Indian government-owned company mandated to store crude oil for emergency needs, follows the arrival, on November 4, of the final shipment of the initial delivery of ADNOC crude to be stored in another ISPRL underground facility in Mangalore, also in Karnataka, which will store 5.86 million barrels of ADNOC crude oil.

The MoU was signed by Abdulla Salem Al Dhaheri, Director of Marketing, Sales and Trading at ADNOC, and HPS Ahuja, CEO and MD at ISPRL, on the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC). The signing was witnessed by Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, and Dharmendra Pradhan, Minister of Petroleum and Natural Gas and Skill Development and Entrepreneurship for the Government of India.

Dr. Al Jaber said: “India is an important oil market, and this agreement underscores the strategic energy partnership between the UAE and India, which leverages the UAE’s and ADNOC’s expertise and oil resources. It is our firm hope that we will be able to convert this framework agreement into a new mutually beneficial partnership that will create opportunities for ADNOC to increase deliveries of high-quality crude oil to India›s expanding energy market and help India meet its growing energy demand and safeguard its energy security.”

ADNOC is the only foreign oil and gas company, so far, to invest, by way of crude oil , in India’s strategic petroleum reserves program. It is also a stakeholder, along with Saudi Aramco, and a consortium of Indian state-run companies, in one of India’s largest refinery and petrochemicals complexes, to be constructed at Ratnagiri in Maharashtra.

Dharmendra Pradhan said: “This Memorandum of Understanding will allow ISPRL to explore, with ADNOC, opportunities related to the possible storage of ADNOC crude at Padur, which would help to significantly strengthen the country’s strategic petroleum reserves. This agreement reflects the strong bonds of cooperation between India and the UAE and provides a foundation for strengthening and expanding our strategic energy relationship.”

In addition to ADNOC’s stake in the Ratnagiri refinery, the hydrocarbon linkages between the UAE and India were bolstered in February 2018, when an Indian consortium of three companies, comprising ONGC Videsh, Indian Oil Company and Bharat PetroResources Ltd., was awarded a 10 percent participating interest in Abu Dhabi’s offshore Lower Zakum concession.

ISPRL has already built 5.33 million tons of underground storage capacity at three locations, Visakhapatnam (1.33 million tons), Mangalore (1.5 million tons) and Padur (2.5 million tons), that can meet around 10 days of the country’s oil needs. The government of India, in June 2018, announced the creation of two new reserves, a 4-million-tons storage facility at Chandikhol, in the eastern state of Odisha, and an additional 2.5-million-tons facility at Padur.

Combined, the existing and newly announced facilities will provide around 22 days of emergency coverage for India’s crude oil requirements.

Indian energy demand is forecast, by the International Energy Agency (IEA), to grow by more than any other country in the period to 2040, propelled by an economy that will grow to more than five-times its current size and by population growth that will make it the world’s most populous country. Indian energy consumption is expected to grow more than double by 2040, accounting for 25 percent of the rise in global energy demand, and the largest absolute growth in oil consumption.

India is over 82 percent dependent on imports to meet its crude oil needs, around eight percent of which is supplied by the UAE. In addition to helping to ensure energy security, participation in the oil storage facilities, in India, will enable ADNOC to efficiently and competitively meet Indian market demand. — SG