Indian Govt allows UAE’s Adnoc to export oil from strategic storage

Indian Government Allows Adnoc to Export Crude Oil from Mangalore Reserves

The Indian government, through an order from the Ministry of Commerce and Industry, has recently given approval to the Abu Dhabi National Oil Company (Adnoc) for the export of crude oil stored in underground strategic reserves located in Mangalore. This decision aims to provide operational flexibility to Adnoc, a foreign entity operating within India’s oil sector.

The significance of this approval lies in its impact on the operational dynamics of crude oil exports from India, particularly concerning the existing regulations which primarily mandate the Indian Oil Corporation (IOC) as the sole channel for such exports.

Crude oil, being the fundamental raw material for the production of vital fuels like petrol and diesel, has traditionally been subjected to stringent export controls in India. However, the exemption granted to Adnoc Marketing International (India) RSC Limited India (AMI) from the export condition tied to the IOC represents a significant departure from the established norm.

This exemption empowers AMI to independently re-export crude oil from their commercial stockpile at the Mangalore strategic petroleum reserve, with the onus of associated costs resting on their shoulders.

India’s strategic importance as the world’s third-largest oil importer and consumer underscores the criticality of ensuring a robust and resilient supply infrastructure. To mitigate potential disruptions in oil supply, the country has strategically established storage reserves at three key locations – Visakhapatnam, Mangalore, and Padur. These reserves, with a collective capacity of up to 5.33 million tonnes, serve as a crucial buffer against supply uncertainties and can sustain the nation’s demand for approximately nine days.

Of particular note is the leasing arrangement at the Mangalore storage facility, where half of its 1.5 million tonne capacity has been leased to Adnoc by the Indian Strategic Petroleum Reserve Ltd. This leasing strategy was conceived with the dual objective of facilitating foreign companies to store oil for potential sale to domestic refiners while safeguarding India’s prerogative to prioritize oil usage during emergencies.

Adnoc’s request for export permission, especially in cases where Indian refiners are not potential buyers, underscores the need for operational flexibility within the Indian oil sector. With the issuance of the notification, Adnoc gains the official mandate to export oil from the Mangalore storage facility, marking a significant development in the country’s oil export landscape. This decision not only reflects India’s willingness to adapt to evolving market dynamics but also highlights the government’s efforts to foster a conducive environment for foreign entities operating in the country’s strategic sectors.