Storage of Oil Resources Within India– The Deal With UAE

Oil resources– the words that hold the key to rising up to the top rungs of the ladder of highly resourceful countries. It certainly is a well-known fact that Saudi Arabia is one of the top most crude oil producing countries, while the mighty USA claims the first place in the attempt to dominate the world. Amidst the competition for bagging the title of being the most resourceful country, there was quite an interesting deal that was negotiated and signed between the Indian government and United Arab Emirates regarding the crude oil resources on the 12th of November 2018.

The curiosity arose due to the fact that UAE, the country ranking 8th or so in the list of countries producing crude oil resources, has been seen clearing away various paths to make its way further to the top. It took its first strides when Abu Dhabi, the second most populated capital and the largest of the seven of the UAE’s emirates, through the means of the state-owned oil company, the Abu Dhabi National Oil Company, constructed a deal and successfully managed to sign the same with India.

Upon digging deep into the deal that was made between the two nations, we gain further insight on the components that have structured the said agreement. The first thing that comes to the picture is of course the very aspect of crude oil. The prospect of India leasing out storage of crude oil is certainly appealing. India has begun strengthening its foreign ties, and this is the second request for establishing oil storage facilities in India.

The first request came through in the month of February when Mr. Narendra Modi signed an agreement on his visit to UAE, bringing together ISPRL, the Strategic Petroleum Reserve Entity of India and  ADNOC, the Abu Dhabi National Oil Company. The said arrangement allows India to make use of these crude oil resources in times of emergency or need, and likewise allows ADNOC to sell part of the crude oil to Indian refiners as and when required. Within the next 4 months, on the 21st of May, India received its very first cargo oil shipment from ADNOC for its strategic petroleum reserve at Mangalore. The shipment is under the agreement where ADNOC will be storing 5.86 million barrels of crude oil in the country under the SPR programme.

The recently enforced agreement shines light upon the storage facilities available in Karnataka at Padur. Dharmendra Pradhan, the Oil Minister of India who was present  when the signing took place in Abu Dhabi, stated that it is an opportunity for the ADNOC to explore investment possibilities in filling up for crude oil in Padur strategic reserve in Karnataka. The agreements of the deal so far allow ADNOC to sell or trade crude oil storage in the storages to local refiners but the Indian government has the first right to the oil in any case of emergency. Under the same above conditions it authorises the Cabinet to rightfully lease out the storage for other foreign companies as well.

This sure does indicate towards the budding relationships between our nation and other countries. It also points us towards picturising India as a developed nation one day, given the circumstances of foreign equation India currently holds, it is headed in the right direction. It is a healthy practice of every country to help another country when in need. However, India’s history is marred with  the days of the struggle for independence from the British, who had entered as opium traders but ended up looting the country, using Indians and leaving behind a deep fear of foreign investments, deals, negotiations.

So far, India  has moved on  in the recent years of democracy, modernity, and  peace-making, yet somehow the Indian markets are still used as dumping sites. Various analysis drawn by economists conclude at this point. The only question left to ask would be whether ADNOC is looking forward to healthy ties with India or if it is just another country that is tracing its way to India due to the oligopolistic markets and cheap availability of labour. . Though it might come off as a strong accusation, precautionary measures have to be installed and updated time and again to prevent yet another invasion by the Middle-East through the form of oil traders. The recent agreement has a lot to offer, especially with regards to lesser import charges which will have an impact on the insane hike of the fuel prices. Considering all the factors, Padur still awaits its first ever shipment of crude oil resources. With Padur on the map, future opportunities seem to be bright.

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