India on Wednesday signed an agreement with the United Arab Emirates (UAE) for storing crude oil at a strategic facility in Mangalore. India imports 80% of its crude oil requirements and to hedge against any emergency and safeguard its energy security programme, the country is building vast facilities to hold around 36.87 million barrels of crude oil.
The agreement on oil storage and management was signed between Indian Strategic Petroleum Reserves Limited and Abu Dhabi National Oil Company. Under the agreement, India will have the first right to storage of crude in case of any emergency and the overseas company can move cargoes in case of change in the demand scenario.
The agreement was signed by India’s oil minister Dharmendra Pradhan and a representative from Abu Dhabi National Oil Company.
Commenting on the agreement, Pradhan said, “It is our hope that this strategic agreement will build on the strong bonds of cooperation between our two nations and provide the foundation for a mutually beneficial energy partnership. This will also help to ensure India’s energy security and enable us to meet the nation’s growing demand for energy.”
He added that the agreement is also a reflection of the vision of Prime Minister Narendra Modi towards strengthening hydrocarbon linkages with UAE on a win-win basis.
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A government release noted that the agreement aims to establish a framework for the storage of crude oil by Abu Dhabi National Oil Company in India and to further strengthen the strategic relationship between the two countries in the field of energy.
The development comes at a time when the Abu Dhabi’s Crown Prince Sheikh Mohamed bin Zayed al-Nahyan is in India to be the guest of honour at Republic Day parade.
Speaking about the partnership, Modi said, “Our energy partnership, is an important bridge in our linkages. It contributes to our energy security. His Highness (Zayed al-Nahyan) and I discussed ways to transform our energy ties in a strategic direction through specific projects and proposals. In this regard, long-term supply contracts and establishment of joint ventures in the energy sector can be beneficial avenues.”
Import-dependent India aims to cut oil import by 10% by 2022 and halve the same by 2030.
“The deal is for one of the caverns in Mangalore and this is the first investment by UAE in the country’s hydrocarbon sector,” said Sunjay Sudhir, joint secretary-international cooperation, ministry of petroleum and natural gas.
He added that the discussions were on for two years and the two countries are moving towards strategic partnership. UAE is India’s fifth-largest supplier of crude oil and third-largest supplier of natural gas.
By Saurabh Kumar