New Delhi, Oct 14 (IANS): In a major policy shift, the Indian government on Wednesday allowed the Abu Dhabi National Oil Co (ADNOC) to export oil that it has filled in the Indian strategic petroleum reserve (SPR) facility at Manguluru.

The decision, taken by the Union Cabinet, is expected to attract foreign oil majors looking at storage facilities globally to participate in Indian strategic reserves and give a boost to oil storage in the country.

Strategic reserves are offered to foreign entities in several countries across the globe. The measure helps in keeping reserves at full capacity throughout the year. Countries such as Japan and South Korea also allow oil producers to re-export crude storage, a model that will now be followed by India too.

"The move will facilitate trade for ADNOC," Union Minister Prakash Javadekar said while briefing media persons about cabinet decisions.

ADNOC had been seeking permission from the government to export its share of oil stored in strategic reserve cavern in India as Covid-induced demand squeeze and production cuts prevented Indian refiners from buying it.

With the permission, ADNOC can now export oil stored in the Mangaluru SPR in foreign flagged ships. So far, Indian-flagged ships were used for coastal movement of the oil from the cavern.

Sources said that permission to exports for ADNOC from Indian SPR would be conditional as the consignment will first have to be offered to Indian entities. They will have first right to refusal.

India has three operational petroleum reserve caverns with a capacity of 5.33 million tonnes of oil. These reserves, located at Visakhapatnam (1.33 mt), Mangaluru (1.5 mt) and Padur (2.5 mt), are managed by the India Strategic Petroleum Reserves Ltd (ISPRL).

The reserves are state-funded and meant to tackle emergency situations, allow a country to tide over short-term supply disruptions.

Another 6.5 mt facility is coming up at Padur in Karnataka and Chandikhole in Jajpur. Work on two more facility at Bikaner in Rajasthan and Rajkot in Gujarat is expected to be initiated soon. When complete, these would hold enough oil to meet over a month of domestic requirements.

In addition, the Petroleum Ministry has told ISPRL to identify new sites so that storage facility for 90-100 days stock of oil ready in the country at all times.

A large strategic oil capacity is important for India that imports more than 80 per cent of its oil needs. Any price shocks, have wide ranging repercussions on the country. Strategic reserves will help to curb price volatility in times of emergencies.