New Delhi: The Union Government has permitted Abu Dhabi National Oil Company (ADNOC) to export the crude oil stored in the Mangaluru Strategic Oil Reserves. The government has made the policy flexible for the purpose. Although the first right on the oil will be of India in an emergency, ADNOC will be allowed to export this oil in normal circumstances. It is claimed that due to this decision, the investment in the Indian strategic oil reserves will increase.
This decision was taken in the Union Cabinet’s meeting, presided over by Prime Minister Modi. It is claimed that this decision will be beneficial from the fuel security of the country. India has created strategic underground storages for the storage of oil for an emergency situation if the oil supply is stopped. There are four underground storages built at Vishakhapatnam, Mangaluru, Padur and Chandikhol in Odisha. India is trying to sign agreements with various companies to store oil in these storage tanks.
If the oil companies from the region store their oil in these storage tanks, in case of an emergency or war situation, the oil will be available to India without spending a single rupee as the first right will be Indian, on the stored oil. A similar agreement has been worked out with ADNOC, and ADNOC has leased 50% of the capacity at the strategic storage at Mangaluru to store its oil.
Accordingly, ADNOC has filled 50% of the tanks at the Mangaluru Strategic Storage. Initially, ADNOC was free to export 35% of the oil, and for the remaining 15%, it needed government approval. But the government has removed this restriction. Therefore, confidence is being expressed that this will encourage ADNOC to store more oil in the Indian strategic oil reserves.
ADNOC has also signed an agreement to take 50% capacity of the Padur storage on lease. But it has not still filled the Padur storage with oil. However, it is being claimed that with this flexible approach of the government, more oil companies will come forward to make such investments in the strategic oil storages.
The oil prices had dropped due to the Coronavirus crisis. The oil rates had crashed to USD 19 per barrel, owing to the dispute between Russia and the Middle East countries. At that time, India filled up its strategic oil reserves with this cheap oil. This resulted in a saving of ₹50 billion. The cost incurred by the country was ₹38.74 billion. The Union Government approved this expenditure. Currently, crude oil is ruling at USD 42 per barrel in the international market.