To bolster its energy security in an increasingly volatile global landscape, India is aggressively expanding its strategic petroleum reserves (SPR). The government has initiated plans to establish new crude oil storage facilities at six additional locations across the country. This move aims to enhance India's capacity to withstand supply disruptions and price fluctuations, safeguarding the nation's energy needs.
India, being the world's third-largest energy consumer, heavily relies on imports to meet 85% of its crude oil requirements. Strategic petroleum reserves are vital for ensuring a steady supply of crude oil during emergencies, allowing the country to ride out external shocks. These reserves are typically stocked when prices are low and released during periods of high prices or supply shortages.
Engineers India Ltd (EIL), a state-owned engineering and consultancy firm specializing in the energy sector, has been tasked with preparing detailed feasibility reports (DFRs) for the six proposed locations. According to sources familiar with the development, one of the proposed sites is located in the Mangalore Special Economic Zone in Karnataka, and another involves utilizing salt caverns in Bikaner, Rajasthan. EIL is expected to submit its comprehensive reports by the end of the year.
The existing SPR facilities, managed by Indian Strategic Petroleum Reserves Limited (ISPRL), have a total storage capacity of 5.33 million metric tonnes (MMT) spread across three locations: Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), and Padur (2.5 MMT). These reserves can currently meet approximately 9 to 10 days of India's crude oil requirements.
In addition to the existing reserves, the government approved the Phase-II expansion of the SPR program in July 2021. This expansion includes the establishment of two additional SPR facilities with a combined storage capacity of 6.5 MMT at Chandikhol (4 MMT) in Odisha and Padur (2.5 MMT) in Karnataka. These projects are being developed under a public-private partnership (PPP) model. Once Phase II is complete, India's overall crude oil reserves are expected to cover up to 22 days of national demand.
The construction of strategic crude oil storage facilities in underground rock caverns is considered a safe and efficient method for storing hydrocarbons. These caverns are strategically located near refineries and ports, facilitating easy access and distribution of crude oil to Indian refineries through pipelines or coastal movement.
The expansion of strategic petroleum reserves is part of a broader strategy to diversify energy sources and reduce dependence on fossil fuels. The government is actively promoting the use of natural gas and biofuels, including the Ethanol Blended Petrol (EBP) program, which aims to achieve 20% ethanol blending in petrol by 2025. This initiative not only reduces reliance on imported crude oil but also contributes to reducing carbon emissions.
To support these efforts, India has allocated significant funds for strategic oil reserve purchases and infrastructure development. The budget for the fiscal year 2025-26 includes approximately $647 million for purchasing oil for the SPRs, along with additional funds for operation, maintenance, land acquisition, and construction of new caverns.
By expanding its strategic petroleum reserves and diversifying its energy sources, India is taking proactive steps to enhance its energy security and ensure a stable supply of crude oil for its growing economy. These measures will help mitigate the impact of global supply disruptions and price volatility, safeguarding the nation's energy future.
