NEW DELHI: As the world runs out of space to store the flood of oil, petroleum minister Dharmendra Pradhan on Tuesday held a virtual meeting with his UAE counterpart Sultan Al Jaber to discuss the possibility of tanking up India’s strategic petroleum storage capacity with crude from ADNOC (Abu Dhabi National Oil Company) to take advantage of the price crash.
UAE is India’s fourth-largest supplier of oil and a major source of LPG. ADNOC has an MoU for the leasing half of the Indian strategic reserve capacity of 2.5 million tonnes at Padur, built by ISPRL. Saudi Aramco is the other major producer that has an MoU for leasing a quarter of the Padur SPR. These companies can store their oil to cater to their strategic needs, while the rest can be sold to refiners. Producers are now hiring crude carriers to store oil as Saudi Arabia and Russia flood the market amid a sharp drop in global demand due to the economic impact of coronavirus pandemic.
Pradhan explained the situation in India that has led to state-run refiners deferring oil shipments. March petrol sales fell 15.5%, diesel 24% and jet fuel 31%. In contrast, LPG sales have risen as families remained confined to their homes and refill deliveries continued unabated. He also requested for additional supplies of LPG as demand is expected to jump up to 15% on the government’s offer of three free cylinders between April and June to eight crore poor households under the Ujjwala scheme — the Narendra Modi government’s marque social welfare scheme.
Pradhan discussed the current global oil market scenario to get a sense of the direction Thursday’s proposed meeting between Opec and Russia to discuss a production cut deal, which did not take place last month after Russia walked out of its 2016 partnership with the grouping of oil-exporting nations. That prompted Riyadh to crash the market by announcing deep discounts and promise to flood the market amid demand slump.
Pradhan had earlier held similar discussion with Saudi Arabian counterpart Abdulaziz bin Salman and US energy secretary Dan Brouillette.
Source: ToI
Image Courtesy: WAPO
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