India-UAE strategic oil reserves deal: 10 things to know
India’s quest for energy security got a major push on Wednesday, after a pact with the United Arab Emirates (UAE) that will flow in as much as one sixth of the India’s total emergency oil reserve. Here’s what you need to know about India’s strategic oil reserves:
1.India signed a deal with the United Arab Emirates on Wednesday that allows the Gulf OPEC country to fill half of an underground crude oil storage facility at Mangalore, Karnataka.
2.The deal is part of New Delhi’s strategic petroleum reserve system, an emergency underground storage of 36.87 million barrels of crude oil which can supply about 10 days of the country’s average daily oil demand.
3.UAE’s Abu Dhabi National Oil Co (ADNOC) will store about 6 million barrels of oil at Mangalore, taking up about half of the site’s capacity.
4.This is the second agreement signed between Indian Strategic Petroleum Reserves Limited and ADNOC in the area of storage and management of oil at strategic facilities in India. Crude oil supplies from ADNOC will begin in the last quarter of 2017.
5.Three years ago, India began talks to lease part of its strategic storage to ADNOC. Under those discussions in 2014, India was to have first rights to the stored crude oil in case of an emergency.
6.Strategic petroleum reserves have become indispensable to safeguard the economy and to help maintain national security in the event of an energy crisis. These crude oil inventories (or stockpiles) can be held by the government of a particular country, as well as by private industry.
7.In fact, India has already filled the other half of the Mangalore storage facility with 6 million barrels of Iranian oil. The country has another storage site in Vizag, Andhra Pradesh with 7.55 million barrels of Iraqi oil and a third such facility in Karnataka’s Paduran, with a storage capacity 18.3 million barrels.
8.According to the United States Energy Information Administration, approximately 4.1 billion barrels of oil are held in strategic reserves globally, of which 1.4 billion is government-controlled. The remainder is held by private industry.
9.The US has the world’s largest reported Strategic Petroleum Reserve with a total capacity of 727 million barrels. If completely filled, the US reserves could theoretically replace about 60 days of oil imports.
10.China has built its crude oil stockpile through government-controlled strategic reserves complemented by mandated commercial reserves. It plans to increase its strategic petroleum reserve to 90 days of supply by 2020.