Spglobal — Abu Dhabi National Oil Co., the UAE's largest oil producer and the only overseas company with crude stored in India's caverns, said Oct. 27 it is interested to supply more crude to the Asian country's strategic petroleum reserves in its efforts to boost energy ties with the world's third largest oil consumer.

ADNOC wants to expand the "commercial scale and scope of this strategic reserves partnership," CEO Sultan al-Jaber said during a virtual interactive meeting of oil and gas CEOs with Indian Prime Minister Narenda Modi on the sidelines of the India Energy Forum by CERAWeek, according to the ADNOC statement.

The UAE producer, which counts India as its second-biggest market, also invited Indian companies to invest in the country's downstream sector. ADNOC in 2018 unveiled plans to invest $45 billion in its downstream sector alongside partners.

"I see significant new opportunities for enhanced partnerships, particularly across our downstream portfolio," Jaber said. "We have launched an ambitious plan to expand our chemicals, petrochemicals, derivatives and industrial base in Abu Dhabi and I look forward to exploring partnerships with even more Indian companies across our hydrocarbon value chain."

India's demand

Given the weak oil demand in India this year due to the COVID-19 pandemic, ADNOC has been urging the Indian government that it be allowed to export some volumes from the caverns.

The recent policy change by New Delhi has brought India in line with major Asian oil consumers, like Japan and South Korea, where international oil producers store oil as well as re-export from those facilities. Before the policy change, overseas companies looking to store oil in Indian SPRs were only permitted to sell only 35% of their volumes commercially, that also to domestic refiners.

"India's remarkable growth as an economic power has cemented its place as one of the world's largest energy consumers," Jaber said. "In fact, it represents the second biggest market for ADNOC. ADNOC is ready to meet India's growing demand across the full portfolio of our products."

In the past two years, ADNOC has enhanced its strategic energy links with India – a key growth market for crude, refined and petrochemical products. In addition to its partnership in SPRs, ADNOC is also a stakeholder in one of India's largest refinery and petrochemicals projects, to be constructed on India's west coast.

"I believe that by seizing these opportunities, we can in fact enhance the speed of post-COVID economic recovery," Jaber added.

Two agreements

ADNOC has two agreements to supply crude to ISPR at Padur and Mangalore in Karnataka in southern India.

ISPR has set up its storage sites at three locations with a combined capacity of 5.33 million mt: Visakhapatnam (1.33 million mt), Mangalore (1.5 million mt) and Padur (2.50 million mt).

The UAE was the third-largest oil supplier to India in the January-August period, with shipments of 10.92 million mt, accounting for 9% of the India 's crude import basket.

The interest from ADNOC to boost its involvement in SPRs comes as India's Ministry of Petroleum and Natural Gas said Oct. 15 that ADNOC can re-export the crude to other countries "with the first right of refusal retained by the government."

The recent policy decision allowing overseas producers to re-export up to 50% of their volumes from SPRs is already attracting interest from big Middle Eastern producers, H.P.S. Ahuja, ISPR CEO and Managing Director told S&P Global Platts Oct. 20.

India filled its domestic SPRs mainly with cargoes from the Middle East earlier this year when oil prices crashed amid sharp destruction in demand following the COVID-19 outbreak. Ahuja told Platts the SPRs are currently completely filled.

ADNOC has been expanding its partnership with India and oil companies there.

ADNOC, Aramco and Indian state-owned refiners IOC, HPCL and BPCL plan to build a 1.2-million b/d refinery in Ratnagiri on India's west coast.

In March 2019, Bharat Petroleum Corp. and Indian Oil Corp. won exploration rights for an onshore block in Abu Dhabi. This followed the award in February 2018 of a 10% participating interest in Abu Dhabi's offshore Lower Zakum Concession to a consortium made up of ONGC Videsh, Indian Oil C. and Bharat PetroResources.