Abu Dhabi National Oil Company (ADNOC), Saudi Aramco of Saudi Arabia and Royal Dutch Shell have evinced interest in hiring strategic oil storage that India has built on east and west coasts, Oil Minister Dharmendra Pradhan said today.
India, which is 80 per cent dependent on imports to meet its crude oil needs, has built three underground oil storages at Vishakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka as insurance against supply disruptions.
“ADNOC of UAE, Saudi Aramco of Saudi Arabia and Shell have expressed their interest in storing crude oil in the strategic petroleum reserve facilities,” he said in a written reply to a question in the Rajya Sabha here.
Pradhan said under Strategic Petroleum Reserve project Phase-I, underground rock caverns for storage of 5.33 million tons of crude oil at three locations — Vishakhapatnam (1.33 million tons), Mangalore (1.50 million tons) and Padur (2.5 million tons) have been created.
“The Vishakhapatnam and Mangalore storage facilities have already been commissioned. The facility at Vishakhapatnam has already been filled up and nearly one-fourth of Mangalore storage facility has also been filled. The storage facility at Padur has also been completed,” he said.
These reserves as well as storages at refineries and depots are enough to meet 73.5 days of India’s crude requirement, he added.
“To facilitate participation of foreign investors in filling up part of Mangalore storage facility, Government has inserted Section 10 48(A) in the Income Tax Act providing for exemption from income tax of a notified foreign oil company,” he said.
Finance Minister Arun Jaitley in his budget for 2016-17 gave tax exemption to income of foreign company from storage and sale of crude oil stored as part of strategic reserves.
Indian Strategic Petroleum Reserves Ltd (ISPRL) has built the underground storage facility. But to meet the huge cost of filing the storages with crude oil, the Government is keen to meet a substantial part of the financial burden through participation of private players including foreign national oil companies (NOCs) and multinational companies (MNCs) storing and selling crude oil from outside India.
However, the storage of crude oil by NOCs/MNCs and its sale in India would have created tax liability for these entities.
In order to achieve neutrality in terms of taxation to encourage the NOCs and MNCs to store their crude oil in India and to build up strategic oil reserves, Jaitley amended the provisions of Section 10 of the Act to provide that any income accruing or arising to a foreign company on account of storage of crude oil in a facility in India and sale of crude oil therefrom to any person resident in India shall not be included in the total income. Jacquizz Rodgers JerseyShare This