The Union Cabinet has permitted the Abu Dhabi National Oil Company (ADNOC) to export crude oil it has stored in Indian strategic reserves. ADNOC has lowered the quantity of crude oil it must always keep in the emergency stockpile in a bid to make it commercially more attractive for foreign investor. ADNOC and Saudi Aramco have shown interest in filling the Indian strategic reserves.
The freedom to re-export crude from the Indian strategic reserves will make India a regional crude storage hub from where they can serve neighbouring countries like Bangladesh and Sri Lanka. The modifications, including increase in commercial quantity for ADNOC to 50 percent, re-exporting crude to third countries with the first right of refusal to Indian companies as well as coastal movement of crude from/to strategic petroleum reserve, will enhance commercial viability of crude storage by ADNOC.
The government has used its own funds to fill the balance capacity of 4.55 million tonne of emergency stockpile. The increase in commercial quantity for ADNOC to 50 percent means the company can trade half of 0.75 million tonne at any time but can’t allow the stored quantity to slip below 50 percent.
This will mean the government can have access to at least 50 percent of stored oil during a supply emergency, lower from the current 65 percent. The modifications will also encourage new investments in the strategic petroleum reserve programme. The current set of strategic reserves is already filled but the new policy can help the government in attracting investors for the next set of reserves it is planning to build with help of the private sector.
The Union Cabinet also approved post facto the release of Rs 3,874 crore to the Ministry of Petroleum and Natural Gas in April 2020 for filling of the reserves.