India's Strategic Petroleum Reserves to get boost from ADNOC

Abu Dhabi National Oil Co. said it aims to boost its crude holdings in India's Strategic Petroleum Reserves to up to 30 million barrels, under a deal announced May 15, as New Delhi seeks to bolster its energy security in the face of wars involving the Middle East and Russia and growing domestic demand.

Under a separate agreement, India will explore the potential to store crude at the UAE's eastern oil hub, Fujairah, which would form part of India's SPRs.

The deals were signed during the visit of Indian Prime Minister Narendra Modi to the UAE and after meetings with President Sheikh Mohammed bin Zayed al-Nahyan, the two sides said.

They also agreed to collaborate on setting up LPG and LNG storage facilities in India.

ADNOC said in a statement that its potential additions to India's SPRs could come at existing storage facilities at Mangalore, as well as potential new storage opportunities at Vishakhapatnam and Chandikol, both on the Bay of Bengal on the country's east coast.

The cooperation is aimed at "supporting energy security and enhancing the resilience of UAE-India energy supply chains amid a challenging global shipping environment," ADNOC added.

ADNOC currently holds about 5.86 million barrels of capacity at the Mangalore SPR facility in India, according to company officials.

SPR development

India's SPRs currently provide coverage of about 9.5 days of net oil imports, while state-run oil companies hold crude oil and petroleum product storage equivalent to 64.5 days of net imports. This brings the country's total national storage capacity for crude and petroleum products to roughly 74 days of net imports, according to petroleum ministry data.

By comparison, International Energy Agency member countries are required to maintain oil stocks equivalent to at least 90 days of net imports. India joined the IEA as a full member in 2023.

In its first phase, India established SPRs at three locations with a combined capacity of 5.33 million metric tons: 1.33 million mt at Visakhapatnam, 1.5 million mt at Mangalore and 2.5 million mt at Padur in Karnataka.

In the second phase, the country plans to further expand capacity by adding another 6.5 million mt of SPRs at two sites: 4 million mt at Chandikhol in the eastern state of Odisha and 2.5 million mt at Padur.

ADNOC expansion

For ADNOC, the deal secures potential additional outlets for its crude. The company, which pumps the vast majority of the UAE's crude, has ambitions to expand its production capacity to 5 million b/d by 2027, Platts reported previously, but has been constrained in recent years by the country's participation in the OPEC+ supply accord, which imposed quotas on each member's output.

The UAE terminated its membership in OPEC and the OPEC+ alliance as of May 1, but for April, it had committed to holding production to a quota of 3.429 million b/d. Due to the US-Israel war with Iran, which has blocked the UAE's primary export route through the Strait of Hormuz, the country was only able to pump 2.02 million b/d, according to the latest Platts OPEC+ production survey from S&P Global Energy.

To get around the Strait of Hormuz, ADNOC has a 1.8 million b/d pipeline to Fujairah, which is located outside the Persian Gulf and has developed into a key energy and bunkering hub, with several storage facilities. ADNOC announced earlier May 15 that it plans to double its export capacity at Fujairah with a new pipeline connecting the port to oil fields and facilities in the UAE's west, with a targeted completion date of 2027.

"Strategic collaborations reinforce ADNOC's role as a reliable energy supplier to India, supporting energy security and deepening long-term cooperation," ADNOC said.

Modi also conveyed India's clear position in favor of ensuring safe transit passage and unimpeded navigation through the Strait of Hormuz, which is vital for enduring regional peace and stability, as well as energy and food security, an Indian government statement added.