The move may enhance foreign participation as India seeks to expand its storage capacity
Union minister Prakash Javadekar told reporters after the cabinet meeting that the council of ministers have decided “to allow Abu Dhabi National Oil Co (ADNOC) to trade the oil it has stocked at the strategic reserves”.
The permission to ADNOC — the national oil company of Abu Dhabi — to export its oil mirrors a model adopted by countries such as Japan and South Korea which allow producers to re-export the crude in their storages.
The Mangalore storage has a total capacity of 1.5 million tonnes. Of this, half had previously been hired by ADNOC.
The arrangement with ADNOC allows India to have a first right over the crude oil stored in the reserves during any emergency, the minister said.
Besides hiring half of the Mangalore capacity, ADNOC had in November 2018 signed up to hire half of the 2.5 million tonne (about 17 million barrels) capacity at Padur, the biggest of the three storages. However, Adnoc did not store any oil.
Javadekar also said that the Cabinet has given a post-facto approval to spend
Rs 3,874 crore on stocking low priced oil in the three underground crude oil storages.
India had saved over Rs 5,000 crore by taking advantage of the low crude oil prices in the international market during April-May by filling up the crude caverns.
Nagarnar plant selloff
State-owned NMDC is building the steel plant at Nagarnar in Chhattisgarh.
The process of demerger and disinvestment will be initiated in parallel and the divestment of the demerged company (NSP) is expected to be completed by September 2021.
Read More: Export from crude oil caverns