India to lease caverns for oil storage; Abu Dhabi secures rights in Padur

By siliconindia  |  Wednesday, 07 February 2024, 10:23:26 AM IST

India to lease caverns for oil storage; Abu Dhabi secures rights in Padur
The Indian government has announced intentions to rent out areas within subterranean rock caverns initially intended for the storage of hydrocarbons as a component of the country's strategic petroleum reserve. This move follows a strategic adjustment in reaction to evolving patterns in international oil markets and the imperative to enhance the efficiency of current infrastructure for bolstering energy security.
According to the announcement, an invitation for leasing the storage facilities will be issued soon. These underground storage facilities, strategically positioned in three southern Indian cities - Visakhapatnam, Mangalore, and Padur in Karnataka - were originally built by India Strategic Petroleum Reserve Ltd. to accommodate a collective capacity of 5.33 million tonnes of oil, primarily intended for emergency scenarios such as supply interruptions or conflicts.
The decision to lease these caverns highlights India's flexibility in responding to shifting market dynamics and its commitment to strengthening energy security. With the postponement of filling the caverns with crude oil, as detailed in the Union Budget 2023-24, the government seeks to utilize these assets to address changing energy requirements and encourage commercial usage.
Presently, the National Oil Company (Adnoc) from Abu Dhabi has already secured leasing rights for half of the storage capacity at Padur and 1.5 million tonnes at Mangalore. However, significant storage space remains available, including 0.75 million tonnes at Mangalore and the vacant portion in Visakhapatnam, which will be made available for leasing, as confirmed by LR Jain, CEO and Managing Director of Indian Strategic Petroleum Reserves Limited (ISPRL).
Importantly, Jain stressed that despite international companies like Adnoc being able to utilize these reserves for oil storage, India will maintain primary access to the stored oil, ensuring preparedness for emergencies. This stipulation underscores the government's dedication to national energy security and fortitude in confronting unexpected obstacles.
The decision to lease these caverns signifies a strategic shift in India's energy management strategy, reflecting its position as the world's third-largest oil importer and consumer. Through the optimization of current infrastructure and collaboration with international allies, India seeks to bolster its energy resilience and minimize vulnerabilities to fluctuations in the global market. As the country persists in its quest for sustainable economic development, strategic endeavors such as these are instrumental in safeguarding its energy prospects for the future.

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