BACKGROUND: India’s Oil Dependency & Strategic Reserves –

Oil Dependency

India imports ~85% of its crude oil needs, making it highly vulnerable to:

• Global oil price volatility
• Geopolitical disruptions (e.g., Iran crisis, Russia-Ukraine war)
• Supply chain shocks (e.g, Red Sea disruptions)

 

Existing SPR System

• Managed by Indian Strategic Petroleum Reserves Ltd. (ISPRL), under the Ministry of Petroleum and Natural Gas.
• Current SPR facilities:
• Visakhapatnam (Andhra Pradesh): 1.33 MMT
• Mangalore (Karnataka):1.5 MMT
• Padur (Karnataka):2.5 MMT
• Total existing capacity: 5.33 MMT, covering around 9.5 days of net oil imports.

Existing Crude Oil Storage Capacity

• 1.33 MMT (Vishakhapatnam, AP)
• 1,5 MMT (Mangalore, Karnataka)
• 2, 5 MMT(Padur, Karnataka)

Upcoming Crude Oil Storage Capacity under SPR-II

• 4 MMT (Chandikhole, odisha)
• 2.5 MMT(Padur, Karnataka)

Combined Buffer

• Including oil in storage with refiners and in transit, India has ~75 days of oil coverage.
• However, to qualify for International Energy Agency (IEA) membership, a country must maintain 90days of net oil import cover.

 

NEW STRATEGIC PLAN (2025)

India is now planning a massive expansion of its SPR infrastructure active consideration.
with multiple new locations under

Proposed New SPR Sites

Location                                              State                                    Capacity (Proposed)                                      Notes
Bikaner                                                Rajasthan                   ~5.2-5.3 MMT (Underground)          Inland location, closer to refineries
Mangalore-ll                                       Karnataka                          1.75 MMT                                    Expansion near existing terminal
Bina                                                    Madhya Pradesh                TBD                                                  Near BPCL Bina refinery

These are in addition to two already approved expansions:

• Padur-Il: +2.5 MMT
• Chandikhole (Odisha):4 MMT

Total cumulative capacity after expansion could exceed 17 MMT, increasing India’s SPR coverage by 30-40 days.

OBJECTIVES BEHIND THE MOVE

Energy Security Enhancement

• Reduce vulnerability to supply shocks, such as:
• Red Sea crisis
• Strait of Hormuz blockade
• Western sanctions on oil-exporting nations
• Safeguard economy during emergencies (e.g, wars, pandemics, embargoes)

Compliance with IEA Norms

• India has been pushing for IEA membership.
• Must meet IEA’s requirement of 90-day stockpile capacity.
• The current ~75 days falls short.

Strategic Leverage

• Ability to release oil from SPRs to manage domestic price inflation.
• Use during OPEC supply cuts to stabilize the Indian market.

Private Sector Participation

• Allow oil companies (Indian + foreign) to lease storage and trade crude stored in SPRs.
• Aligns with models in Japan and South Korea.
• Encourages public-private partnerships for cost-efficiency.

IMPLEMENTATION ROADMAP

Feasibility Studies

• Engineers India Ltd. (EIL) appointed to conduct technical and financial feasibility for the new reserves.
• Includes geotechnical surveys, cost analysis, risk assessments, and environmental clearances.

Government Approval

• After feasibility, projects will need Cabinet-level approvals.
• Land acquisition, environmental and safety clearances will follow.

Commercialization Model

• Oil companies may be allowed to store oil for trading
• Government retains right to requisition oil during emergencies.

COMPARISON WITH OTHER COUNTRIES

Country                                               SPR Capacity (Days of Import)                                      Ownership Model

USA                                                   -714 million barrels (~95 days)                                         100% Govt-owned
China                                                 ~500 million barrels (~90 days)                                                Hybrid
Japan                                                 ~500 million barrels (~160 days)                                       Govt + Private leasing
India (Post-expansion)                       ~90 days (planned)                                                         Govt + Commercial leasing

CHALLENGES AHEAD

Land Acquisition

• Acquiring large, secure underground or coastal land for caverns is time-consuming

Geological Limitations

• Not all regions are suitable for building underground rock caverns.

High Capital Costs

• SPRs require र1, 000-1, 500 crore per MMT in construction and maintenance.

Private Sector Hesitation

• Needs clarity on usage rights, taxation, and emergency control.