The Abu Dhabi National Oil Company (ADNOC) is expected to fill up storage tanks that it has contracted from the Indian government in the first week of November, senior Indian oil officials said.
ADNOC has so far filled two-thirds of the 5.86 million barrels of tank capacity at the Mangalore Strategic Petroleum Reserves (SPR) facility with Das crude, they said.
“The third VLCC (Very Large Crude Carrier) will arrive next week,” Sunjay Sudhir, joint secretary of international cooperation at India’s Ministry of Petroleum & Natural Gas, told reporters.
ADNOC is able to access the storage and sell a portion of the crude to Indian refiners under a 7-year deal with the Indian government, he said.
However, the oil cannot be re-exported unless the agreement has been terminated, Sudhir said, adding that the government also has the first right to buy the oil in times of emergency.
The Mangalore SPR facility has a capacity of 1.5 million tonnes (10.95 million barrels).
The remaining capacity is solely for SPR and it has been filled up with Iranian crude, Sudhir said.
An ADNOC spokesman confirmed that the company had already sent two shipments to the Mangalore storage facility and that a third was expected to be sent before year-end.
India has completed building its first phase of SPR at Vishakhapatnam, Mangalore and Padur with a total capacity of 5.33 million tonnes.
The Indian government is in talks with two Middle Eastern oil producers, including Saudi Aramco, to fill up tanks at Padur, Sudhir said. The first phase of Padur SPR was completed in September this year and has a capacity of 2.5 million tonnes.
The officials were in Singapore to seek private investors to build, operate and fill the second phase of its SPR with crude.
Construction of phase 2 is estimated to cost $1.6 billion, while the cost of filling it with crude would be three times the investment at today’s oil price, Sudhir said.
When completed, the two phases of SPR combined with commercial storage at refineries would hold oil equivalent to about 64 days of India’s needs, he said.