UAE Offers India Free Oil To Ease Storage Woes
The UAE’s Abu Dhabi National Oil Company (ADNOC) has agreed to store crudeoil in India’s maiden strategic storage facility, sweetening the deal by saying India could take two-thirds of the oil for free.
It’s a great deal for India, which is almost fully reliant on imports to meet its crude oil needs.
India has lured Abu Dhabi in with the building of a massive underground storage facility system that will be able to take on 5.33 million tons of crude as a bulwark against global price shocks and supply disruptions.
ADNOC is eyeing half the storage capacity at one of the new underground facilities, Mangalore, which has a 1.5-million-ton capacity on its own. Abu Dhabi plans to stock 0.75 million tons, or 6 million barrels of oil, here, and 0.5 million tons will belong to India.
The deal is reflective of a wider, global storage panic and talk of what could happen when we reach ‘’peak storage’’. A number of analysts have suggested that oil prices might crash to $20, or even $10 a barrel, if storage tanks become full.
Storage is now at the highest level in at least a decade.
In the U.S., crude storage levels hit 487 million barrels in early November, closing in on the 80-year high of 490 million barrels hit earlier this year.
According to the U.S. Energy Information Administration (EIA), about 60 percent of the U.S.’ working storage capacity is filled.
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