India signs strategic oil reserves deal with Saudi
04 November 2019
India’s energy partnership with the world’s biggest oil producer that will enable energy security in the long term took a leap forward with a bilateral deal to build emergency crude reserves as a buffer against volatility in oil prices and supply disruptions for Asia’s third-largest economy.
Indian Strategic Petroleum Reserves Limited signed an agreement with Saudi Aramco to lease part of the 2.5 million-tonne Padur storage in Karnataka.
India has already built 5.33 million tons of underground reserves in three locations, which can meet about 10 days of the country’s oil needs. Delhi plans two new reserves with a combined capacity of 6.5 million tons, sufficient to cover for an additional 12 days.
The deal with the state-run Saudi Aramco was signed on the occasion of the visit of PM Narendra Modi. UAE has also contributed to the petroleum strategic reserves in India.
The deal on strategic oil reserves was not the only outcome. The Middle East unit of India’s top refiner and fuel retailer, Indian Oil Corp, signed a preliminary deal with Saudi Arabia’s Al Jeri Transport Company for cooperation in the downstream sector, including setting up fuel stations in the kingdom.
Saudi Arabia has also expressed interest in picking up the government’s stake in Bharat Petroleum Corporation (BPCL), official sources said. Sources said Aramco is currently evaluating its Indian investments and views buying out BPCL as a good opportunity.
Saudi Aramco is also expected to partner in the Modi government's mega project, the West Coast Refinery, worth over Rs 4 lakh crore.