India leverages energy security ties with UAE for domestic cooking gas supply

NEW DELHI: United Arab Emirates' (UAE) state-owned Abu Dhabi National Oil Company (Adnoc) will help India provide free cooking gas cylinders for three months under the Ujjwala Scheme.

The announcement to provide 83 million below poverty line (BPL) families free cooking gas cylinders was made as part of India’s Rs1.7 trillion relief package for the poor and underprivileged who have been facing difficulty in earning income due to the 21-day nationwide lockdown to contain the spread of coronavirus.

India’s petroleum minister Dharmendra Pradhan on Tuesday held a video conference with UAE’s minister of state and Adnoc group chief executive Sultan Ahmed Al Jaber.

“At my request, Dr Jaber assured me of additional LPG (liquified petroleum gas) supplies from Adnoc group to meet free supply of three LPG refills during April-June to over 8 crore Ujjwala (scheme) beneficiaries as part of the economic package announced by the government. Have assured of full support in sourcing of crude oil from Adnoc group for India’s strategic petroleum reserves," Pradhan said on Twitter.

While Indian refiners have slashed their production as transportation fuel demand has taken a hit due to the nationwide lockdown that ends on 14 April, there has been an increase in the demand for domestic cooking gas.

India is the world’s third-largest oil importer and the fourth-largest buyer of liquefied natural gas (LNG).

“H.E Dr. Sultan Jaber and I agreed to work closely in the coming days to strengthen India’s energy security, including in our strategic petroleum reserves program,” Pradhan said in his tweet.

Mint had earlier reported that the government was exploring ways to leverage low crude oil prices amid the coronavirus outbreak to fill in its strategic oil reserves.

Adnoc and Saudi Aramco are the only ones to commit to India’s crude oil reserve programme till date. With global oil demand plunging due to rapid spread of the deadly virus, prices have been in tailspin, giving an opportunity for India’s ambitious and costly Indian Strategic Petroleum Reserves (ISPR) programme.

Strategic crude oil reserves, which are typically state-funded and meant to tackle emergency situations, allow a country to tide over short-term supply disruptions. International Energy Agency (IEA) members maintain emergency oil reserves equivalent to at least 90 days of net imports.

Currently, India has storage capacity of 5.3 million tonnes (MT) at Visakhapatnam, Mangaluru and Padur, built with an investment of $600 million in the first phase. This is operational and can support 9.5 days of net imports. In addition, the government has approved the construction of a 6.5 MT strategic crude oil reserves at Chandikhol in Odisha and Padur in Karnataka. The government has created a special purpose vehicle (SPV)—Indian Strategic Petroleum Reserves Ltd (ISPRL)—-for this purpose.