New Delhi on Wednesday signed a crucial pact with the energy rich Gulf nation, the United Arab Emirates that will ensure part-filling of its strategic underground oil storage facility built at Mangalore, a significant move towards ensuring India’s energy security goals.
Through this pact, India aims to establish a framework for the storage of crude oil by Abu Dhabi National Oil Company (ADNOC) in India and to further strengthen the strategic relationship between the two countries in the field of energy.
The pact assumes immense significance for an oil importing nation like India and one that feeds 80% of its crude oil needs through imports. The underground strategic storages have been built at different locations across India and filling half of the oil storage facility at Mangalore amounts to 10 days of India’s average oil demand (or about 37 million barrels of crude oil).
The agreement on oil storage and management is one of the 14 key Memorandum of Understanding (MoUs) executed between India and UAE on various fronts including defence, trade, maritime cooperation, energy.
“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,” Petroleum Minister of India Dharmendra Pradhan said after the pact was signed.
This, he said, will also help to ensure India’s energy security and enable us to meet the nation’s growing demand for energy.
“This agreement is also a reflection of the vision of Prime Minister of India towards strengthening hydrocarbon linkages with UAE in a win-win basis,” the minister added.
The signing took place between Indian Strategic Petroleum Reserves Limited and Abu Dhabi National Oil Company and in the presence of Prime Minister Narendra Modi and Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al Nahyan. This is Sheikh Mohammed bin Zayed Al Nahyan second visit to India after August 2015. This time, Crown Prince of Abu Dhabi is the Chief Guest at the Republic Day Celebrations on Rajpath on January 26, 2017.
Abu Dhabi National Oil Co or ADNOC will store about 6 million barrels of oil at Mangalore, taking up about half of the site’s capacity, said Sunjay Sudhir, joint secretary for international cooperation, ministry of petroleum and natural gas.
ADNOC said the Mangalore oil storage facility is the third that it has access to in Asia after Japan and South Korea, enabling the company to become more competitive in meeting market demand across south east Asia.
“India is an important energy market and this storage agreement reinforces ADNOC’s role as one of the world’s most trusted and reliable suppliers of oil,” Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO said in a statement.
“We will utilise the Mangalore facility to not only build on our existing business relationships across India but also to explore new downstream opportunities for ADNOC’s expanding range of refined and petrochemical products.”
During the day, PM, Modi said UAE is one of India’s most valued partners and a close friend in an important region of the world.
“I have just concluded very fruitful and productive discussions with His Highness. We particularly focused on implementation of various decisions taken during our last two meetings. We agreed to sustain the momentum of our relations in key areas, including energy and investments.”
Stating that he sees UAE as an important partner in India’s growth story, PM Modi welcomed UAE’s interest in investing in India’s infrastructure sector.
“We are working to connect the institutional investors in UAE with our National Investment and Infrastructure Fund. I also shared with His Highness the interest of Indian companies to be a partner in infrastructure projects for the World EXPO 2020 in Dubai. UAE can benefit by linking with our growth in manufacturing and services. We can jointly tap abundant opportunities in our initiatives aimed at building digital economy, human capital and smart urbanization in India,” PM Modi said.
Modi said India and UAE’s energy partnership is an important bridge in our linkages. “It contributes to our energy security. His Highness 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,” Modi added.