PM Narendra Modi with Abu Dhabi’s crown prince Sheikh Mohamed bin Zayed in UAE. (PTI Photo)

NEW DELHI: Prime Minister Narendra Modi ’s visit to west Asia has cleared the way for turning India into a regional oil storage and trading hub, with Abu Dhabi National Oil Company ( ADNOC ) getting ready to park its crude in Indian storage facility.

This will be the first investment from the UAE into an Indian oil project, marking the turning point in New Delhi’s buyer-seller relationship with West Asian oil producers.

State-run Indian Strategic Petroleum Storage Ltd signed an agreement with ADNOC for using part of storage capacity at Padur near Mangalore, giving finality to a deal signed during January 2017, visit of Abu Dhabi’s crown prince of Sheikh Mohamed bin Zayed to India as the R-Day chief guest.

Since then the two sides have been working out the details of the deal, including easier tax norms sought by ADNOC.

ADNOC will park 5,860,000 million barrels, or a little less than a million tonne, of crude at ISPRL’s Mangalore storage facility. ADNOC will use part of this oil to supply its customers, while the rest will remain as strategic storage, to be released to meet emergencies such as supply disruption due to natural disaster or geopolitical factors.

ISPRL’s Mangalore storage consists of two compartments with a total storage capacity of one and a half million tonne. One compartment has been filled with crude bought with funds from the Centre.

The storage puts on tap oil stock for India, enhancing the country’s energy security. It will also bring economic viability to the project.

For ADNOC, storing oil in India will allow the company to efficiently and competitively meet market demand in India and across the fast-developing southeast Asian economies.

This is the latest among several investment proposals India is working on to turn its west Asian oil suppliers into strategic investors in the country’s oil economy.

Saudi Aramco, for example, is in talks with a consortium of Indian state-run oil companies for stake in a mega refinery and petrochemicals complex proposed to be built at an investment of at nearly Rs 40,000 crore.

