Saudi Aramco, Shell want to hire strategic oil storages

Abu Dhabi National Oil Company (ADNOC), Saudi Aramco of Saudi Arabia and Royal Dutch Shell have evinced interest in hiring strategic oil storages that India has built on east and west coasts, Oil Minister Dharmendra Pradhan said on Wednesday

India, which is 80 per cent dependent on imports to meet its crude oil needs, has built three underground oil storages at Vishakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka as insurance against supply disruptions.

“ADNOC of UAE, Saudi Aramco of Saudi Arabia and Shell have expressed their interest in storing crude oil in the strategic petroleum reserve facilities,” he said in a written reply to a question in the Rajya Sabha here.

Pradhan said under Strategic Petroleum Reserve project Phase-I, underground rock caverns for storage of 5.33 million tons of crude oil at three locations -- Vishakhapatnam (1.33 million tons), Mangalore (1.50 million tons) and Padur (2.5 million tons) have been created.

“The Vishakhapatnam and Mangalore storage facilities have already been commissioned. The facility at Vishakhapatnam has already been filled up and nearly one-fourth of Mangalore storage facility has also been filled. The storage facility at Padur has also been completed,” he said.

These reserves as well as storages at refineries and depots are enough to meet 73.5 days of India’s crude requirement, he added.

“To facilitate participation of foreign investors in filling up part of Mangalore storage facility, Government has inserted Section 10 48(A) in the Income Tax Act providing for exemption from income tax of a notified foreign oil company,” he said.

Finance Minister Arun Jaitley in his budget for 2016-17 gave tax exemption to income of foreign company from storage and sale of crude oil stored as part of strategic reserves.