India signed a landmark contract for the storage of UAE crude oil late January, 2017. The agreement between Indian Strategic Petroleum Reserves and Abu Dhabi National Oil Company (ADNOC) will see around half of India’s Mangalore underground storage facility filled with 5.86m barrels of oil from the Emirates, The Oil and Gas Year reported.
“This mutually beneficial partnership will create opportunities for ADNOC to increase its market share in delivering high quality crude to India’s expanding refining industry, while also helping India meet its growing energy demand and safeguard its security,” said Sultan Al Jaber, UAE’s Minister of State and CEO of ADNOC.
India, hedging against energy security risks, as it imports most of its oil needs, is building emergency storage in underground caverns to hold 36.87m barrels of crude, or about 10 days of its average daily oil demand in 2016, according to Arabian Business.
The idea of Indian Strategic Petroleum Reserves storing ADNOC crude in Karnataka was first floated in 2014. Now secured, it will allow the UAE to move cargoes from the storage facility in order to meet shifts in regional demand.
The handshake strengthens ties between the UAE and a country experiencing a massive rise in energy demand. India imports 79% of its oil, and a total of 8% of this comes from the UAE, making the Gulf state the country’s fifth-largest oil supplier.