(PTI)
The Union Cabinet on Wednesday allowed Abu Dhabi National Oil Co (ADNOC) to trade half of the crude oil it has stored in Indian underground strategic reserves. Till now, ADNOC, which has hired half of 1.5 million tonnes underground storage at Mangaluru, was allowed to commercially use 35 per cent of the oil stored. It could trade or sell another 15 per cent with the explicit approval of the government.
The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, allowed ADNOC to commercially use 50 per cent of the oil it has stored in the reserves, an official said. The flexibility allowed will encourage the company to store more oil in the three reserves India has built as insurance against supply and price disruptions.
The official said while ADNOC bears the cost of oil, India has the first right over its usage in an emergency. This guarantees energy security without spending money on oil. Besides hiring half of the Mangaluru capacity, ADNOC had also in November 2018 signed up to hire half of the 2.5 million tonnes (about 17 million barrels) capacity at Padur, the biggest of the three storages, but did not store any oil.
