In a landmark deal during Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan's ongoing first State visit to India, UAE's national oil company Abu Dhabi National Oil Company (Adnoc) has agreed to store crude oil in India's strategic storage facilities.
The underground storage facilities at Vishakapatnam in Andhra Pradesh, and Padur and Mangalore in Karnataka are aimed at creating a reserve of about 5.3 million tonnes of crude oil to hedge against volatility in global crude oil prices, according to a PTI report.
The three underground facilities -- 1.33 million tonnes at Vishakapatnam, 2.5 million tonnes in Padur and 1.5 million tonnes in Mangalore -- are sufficient to meet India's 10-day oil requirement, the PTI report added.
Adnoc is willing to store about 0.75 million tonnes at the Mangalore facility, the report quoted India's Minister of State for Petroleum and Natural Gas Dharmendra Pradhan as saying.
Earlier in the day, Pradhan held a meeting with Minister for Energy of UAE Suhail Mohammed Al Mazrouei in New Delhi on Wednesday. Al Mazrouei is part of the high-level delegation accompanying Al Nahyan.
Adnoc's stock of 0.75 million tonnes will be in one portion of the Mangalore facility, of which 0.5 million tonnes will be India's share to be used during emergencies. The rest will be used by Adnoc to trade.
The Visakhapatnam storage and Padur stockpile together with the Mangalore storage will be enough to meet the nation's oil requirement of about 10 days.
Out of India's annual crude oil imports of about 189 million tonnes, about 8 percent is met by the United United Arab Emirates (UAE).
Adnoc and Indian Strategic Petroleum Reserve Limited (ISPRL) are working on the strategic reserve project in Mangalore, a government statement quoted Pradhan as saying on Wednesday.
The UAE is India's third-largest trading partner after the US and China, with a bilateral trade valued at about $60 billion, making it India's second-largest export market.
The two sides decided to scale it up by about 60 percent during Prime Minister Narendra Modi's visit to the UAE in August last year, according to a press briefing by Anil Wadhwa, secretary (east) at external affairs ministry, on Wednesday.
The UAE's cumulative FDI in India is $3.3 billion, in addition to the portfolio investment of $5 billion. It has the world's second largest sovereign wealth fund -- the Abu Dhabi Investment Authority (ADIA) -- valued at about $800 billion.