India is planning to establish strategic petroleum reserves (SPRs) at six additional locations as part of a renewed effort to strengthen its energy security, according to sources familiar with the matter.
Engineers India Ltd (EIL), a state-run engineering consultancy, has been assigned to prepare detailed feasibility reports for the proposed sites. The move aims to boost the country’s crude oil storage capacity amid rising concerns over global supply disruptions, particularly in light of recent geopolitical tensions such as the Israel-Iran conflict.
Reports indicate that one proposed strategic petroleum reserve site is in the Mangalore Special Economic Zone in Karnataka, while another is in Bikaner, Rajasthan, where salt caverns are being considered for underground storage. The remaining four locations are near coastal areas and refineries to facilitate easy access and transportation.
“The aim is to expand India’s reserve capacity to 90 days, which is the standard requirement,” a source familiar with the matter said. The feasibility reports for all six sites are expected to be submitted by the end of the year.
India relies on imports for approximately 85 per cent of its crude oil needs and consumes nearly 5.5 million barrels of oil per day. Disruptions—such as a potential shutdown of the Strait of Hormuz, which accounts for roughly 20 per cent of global oil shipments and a significant portion of India’s supply—could critically affect the country’s energy security and economy.
This vulnerability resurfaced during the recent tensions in the West Asia region. “The information requested is confidential, given the current situation,” said L.R. Jain, Managing Director of Indian Strategic Petroleum Reserves Ltd (ISPRL).
Engineers India Ltd confirmed that feasibility studies are well underway, with Mangalore and Bikaner included in the proposed plan. “To the best of our knowledge, the information is accurate,” a company spokesperson stated.
Current Status and Expansion Plan
India currently maintains strategic petroleum reserves at three locations—Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), and Padur (2.5 MMT)—with a combined capacity of 5.33 million metric tonnes, enough to meet only about 9.5 days of national demand. Including stockpiles held by state-owned refiners, the total reserve covers approximately 77 days of net oil imports. In contrast, International Energy Agency (IEA) member countries are required to maintain reserves equal to at least 90 days of imports.
The second phase of India’s SPR program is currently in progress, adding 6.5 MMT of capacity through new facilities in Chandikhol (Odisha) and an expansion at Padur (Karnataka) under a public-private partnership model. The six additional sites under consideration will supplement this ongoing expansion.
Global Partnerships and Cost Considerations
India is actively seeking partnerships with international energy companies to bolster its strategic petroleum reserves. The UAE’s ADNOC has already leased storage space in India’s existing reserves, and more such collaborations are being explored. Building a 1 million tonne SPR facility requires an estimated capital investment of around Rs 2,500 crore, according to the report.
India has previously utilised its SPRs during periods of global market volatility. In November 2021, it released 5 million barrels in coordination with countries like the US, China, and Japan to help ease soaring global oil prices. Earlier, during the 2020 oil price crash, India purchased crude at just $19 per barrel, saving approximately $685 million by filling its reserves at a low cost.
Exploring Alternate Oil Supply Routes
In light of the volatile security situation in the Strait of Hormuz, India is actively working on alternative crude sourcing strategies. These efforts include leveraging two key pipelines that bypass the strait: the 1.5 million barrels per day (mbpd) Habshan-Fujairah pipeline operated by the UAE’s ADNOC, and Saudi Aramco’s East-West pipeline, which has a capacity of 5 mbpd.
According to government sources, the aim is to reduce supply chain risks while maintaining diversified imports from around 39 oil-exporting nations.
