India is strategically enhancing its energy security by building new strategic petroleum reserves (SPRs). SPRs are crucial to act as a buffer against supply disruptions and price volatility in global markets. Recently, Megha Engineering & Infrastructures Ltd (MEIL) was awarded a Rs 5,700-crore project to construct and manage India's first private-sector SPR in Padur, Karnataka.

The Need for Strategic Petroleum Reserves

India's energy security is paramount due to its high demand growth and strategic sovereignty. The country is set to contribute 25% of global energy demand by 2047, necessitating assured, affordable, and clean energy access. Building SPRs reduces dependence on volatile global markets and enhances national security. SPRs help ensure uninterrupted energy supply, which is critical for sustaining infrastructure, manufacturing, and services expansion.

The Padur Project

The new Padur facility, with a capacity of 2.5 million metric tonnes (MMT), is a key part of Phase II of India's SPR program. MEIL has been granted a five-year construction period and a 60-year operational term for the facility. The venture includes a crude oil filling expense of $1.25 billion (Rs 11,020 crore), marking a substantial private investment in strengthening India's energy security infrastructure. The bidding process, managed by Indian Strategic Petroleum Reserves Ltd (ISPRL), was determined by the viability gap funding (VGF) requirements of participants. The VGF was restricted to 60% of the Rs 5,700-crore project value, amounting to Rs 3,420 crore.

India's Existing SPR Capacity

India's current SPR facilities, managed by ISPRL, have a total capacity of 5.33 MMT (39 million barrels) in underground storage at Visakhapatnam, Mangaluru, and Padur. These reserves can provide approximately 9.5 days of consumption. Indian refiners maintain an additional 64.5 days of crude storage, bringing the total reserve oil storage to 74 days. Compared to other countries, India's SPR capacity is considerably less than the United States (727 million barrels) and China (estimated at over 1,200 million barrels).

Future Plans

India is planning to expand its SPR capacity further. In 2018, the government approved the construction of a new storage facility in Chandikhole, Odisha, and doubling the capacity at Padur. There are also plans to expand strategic crude oil facilities in Rajkot, Gujarat. India is aiming to set up SPRs at six new locations with the goal of expanding reserve capacity to ninety days, enhancing resilience against global shocks and bolstering India's energy independence.

Diversification of Energy Sources

In addition to building SPRs, India is focused on diversifying its energy sources. This includes increasing imports from new suppliers, promoting domestic production, and investing in overseas upstream oil. India now sources crude oil from 39 countries, reducing reliance on traditional suppliers and strengthening its geopolitical bargaining power. The country is also promoting alternative fuels, with natural gas and ethanol playing key roles in blending. India has achieved a 15% average ethanol blend rate and is aiming for 20% by 2025. Moreover, India is exploring domestic resources by opening nearly 1 million square kilometers for oil and gas exploration.

Renewable Energy Initiatives

India is committed to transitioning to cleaner energy sources. The country is targeting 500 GW of renewable energy capacity by 2030, with the expansion of solar, wind, and hydro projects. India's National Green Hydrogen Mission aims for 5 million metric tonnes of green hydrogen production by 2030.