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India Plays It Smart, To Save $1.38 Billion: Strategic Reserves Project In Padur To Be Leased Out
Representative Image. (Sean Gallup/Getty Images)
India is in talks with Abu Dhabi National Oil Co (ADNOC), a UAE-based state-run oil company, to lease out half of its strategic petroleum site at Padur, as reported by Business Standard. Padur, located in the southern state of Karnataka, was one of the first sites selected by the government for the important strategic reserves programme.
“We will sign a memorandum of understanding with ADNOC to fill two compartments in Padur along the same lines as the Mangalore cavern,” said a source to the newspaper. The agreement, signed by Indian Strategic Petroleum Reserves Ltd (ISPRL) on India’s behalf, will allow India to access the oil stored by ADNOC at the Padur during emergencies without having to pay for imports. In return, ADNOC can sell oil to refineries in India.
Commenting on how this deal will help save significant foreign exchange, Law Minister, Ravi Shankar Prasad said last week, “Participation by foreign oil companies will significantly reduce budgetary support of the government of India by more than 100 billion rupees ($1.38 billion) based on current prices.”
The government is building strategic petroleum reserves at different locations spread across the country to help tide over external supply shocks and deal with war-time situations. Though countries like the USA and China have also built such reserves, it is doubly important in India’s case due to the nation's excessive dependence on imports for fuel needs.
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