New Deal To Have UAE Fill Half Of Underground Oil Facility In Mangalore

India has today signed a deal with the United Arab Emirates that allows the Gulf nation to fill half of an underground crude oil storage facility at Mangalore which is key to Delhi's reserves. The deal between Indian Strategic Petroleum Reserves Ltd (ISPRL), a firm building the storage, and ADNOC was announced after a meeting on Wednesday between Prime Minister Narendra Modi and Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed al-Nahyan, who is the guest of honour for tomorrow's Republic Day parade.

India, hedging against energy security risks as it imports most of its oil needs, is building emergency storage in underground caverns to hold 36.87 million barrels of crude, or about 10 days of its average daily oil demand in 2016.

UAE's Abu Dhabi National Oil Co agreed to store 6 million barrels of oil at Mangalore - taking up about half of the site's capacity, a government official said. UAE is India's fifth biggest oil supplier.

The agreement would further strengthen the strategic relationship between the two countries in the field of energy, a government statement said. "Our energy partnership is an important bridge in our linkages. It contributes to our energy security," PM Modi said in a speech after his meeting with the crown prince. The two sides had discussed ways to advance their energy ties through specific projects, including long-term supply contracts and joint ventures in energy, he also said.

India in 2014 began talks to lease part of its strategic storage to the UAE. Under those discussions, India was to have first rights to the stored crude in case of an emergency.

However, full details of the agreement announced on Wednesday were not available, and it is not clear when ADNOC will begin storing oil at the Mangalore site.

India has already filled the other half of the Mangalore storage in Karnataka state with 6 million barrels of Iranian oil.

India, the world's third biggest oil consumer, has also filled a Vizag storage site in southern Andhra Pradesh with 7.55 million barrels of Iraqi oil and has invited bids from suppliers to fill an 18.3 million-barrel facility at Padur in Karnataka.