New Delhi: About 95 per cent of the UAE’s oil exports are to East Asia, and it is no wonder that Abu Dhabi, where Prime Minister Narendra Modi arrived Sunday for a two-day visit, delivered its first shipment of oil in December 2009 to be retained in Japan’s Strategic Petroleum Reserve (SPR). India also now has the opportunity to seal an arrangement for providing the UAE with a SPR. Abu Dhabi had mooted such a facility for its oil stocks to be preserved in India in the period of the UPA-2 government.
But a discussion on a SPR for Abu Dhabi could not take place until shortly before the Lok Sabha election. In its second meeting, in Mumbai on March 3, 2014, the India-UAE High-Level Joint Task Force on Investments (HLTFI), attended by representatives of the two governments and the private sector of both countries, approached the issue of the establishing a SPR “in a manner serving the common strategic interests of both countries and based on principles of long-term strategic partnership and cooperation”, according to UAE’s official WAM news agency.
The meeting was co-chaired by then commerce minister Anand Sharma and Sheikh Hamed bin Zayed Al Nahyan, who heads the Abu Dhabi Crown Prince Court, within the broad framework of promoting investments.
The Bilateral Investments Promotion and Protection Agreement (BIPA), with clarifications on reciprocal legal protection for mutual investments, was signed about a year earlier in February 2013, and the second HLTFI meeting emphasised the resolution of problems pertaining to some of UAE’s investments in India — particularly those relating to Etisalat, Emaar and Dubai Ports World.
Nevertheless, a discussion at a high level on the issue of a strategic petroleum reserve in India for UAE’s oil was formalised at the Mumbai meeting in the most important investments forum between the two countries.
While Mr Modi is in the UAE — visiting Abu Dhabi, the Emirati capital, as well as Dubai, the country’s principal trading hub with an infrastructure of international repute — he has an opportunity to give the important subject the momentum it needs, if not clinch it outright, by underlining appropriate political and strategic convergence of views at the highest level.
The UAE is a major trading and investing nation, and the most stable and moderate in the Gulf and the Muslim world. A summit-level thrust at this juncture is likely to impart a greater push to the bilateral relationship than any preceding conversation, and the Indian PM’s intervention has the potential to make India-UAE relations one of high regional significance, with its impact reverberating as far afield as East Africa, while not leaving untouched India’s ties with Afghanistan and Pakistan, given the UAE’s significant standing in those countries.
In India, the construction of the strategic crude oil storage facilities is managed by the Indian Strategic Petroleum Reserve Ltd, a Special Purpose Vehicle, which is a wholly-owned subsidiary of Oil India Development Board. For now, three facilities are sought to be built in Vishakhapatnam, Mangalore and Pudur, near Udipi. A SPR cooperation with the UAE in this sector will not only speed up activity, it will cause the deepening of a potentially strategic relationship.
