Summary
India has embarked on a bold initiative to significantly expand its Strategic Petroleum Reserves (SPR) as a key component of its national energy security and emergency preparedness. Triggered by the vulnerabilities exposed during the 1990 Gulf War—when India had only three days’ worth of crude oil reserves—the government initiated the creation of SPRs in 1998 to safeguard against external supply disruptions. Managed by the Indian Strategic Petroleum Reserves Limited (ISPRL), these reserves currently comprise underground storage facilities at Mangalore, Visakhapatnam, and Padur, with a combined capacity of approximately 5.33 million metric tons (MMT), enough to cover around 10 days of crude consumption.
Recognizing the growing energy demands and geopolitical uncertainties, India has approved a comprehensive expansion plan to nearly double its SPR capacity to about 11.83 MMT, extending coverage from 12 to 22 days. New facilities at Chandikhole in Odisha and Padur in Karnataka, alongside proposed sites at Bikaner and Rajkot, are being developed using advanced underground rock cavern and salt cavern technologies. These expansions are implemented under a Public-Private Partnership (PPP) model, designed to leverage private sector efficiency while preserving government control through long-term concessions.
India’s SPR strategy is part of a broader energy security framework that includes diversifying crude oil import sources beyond the Middle East to Africa, the Americas, and notably increasing imports from Russia since 2022, reshaping geopolitical ties amid international tensions. The country is also boosting domestic production and investing in renewable energy to reduce long-term fossil fuel dependency. As an associate member of the International Energy Agency (IEA), India aligns its reserves with global standards requiring emergency stocks equivalent to 90 days of net imports, underscoring its commitment to international energy collaboration.
Despite these advances, India’s SPR expansion faces challenges related to geopolitical risks—particularly vulnerabilities around chokepoints like the Strait of Hormuz—logistical complexities of large-scale infrastructure projects, and economic concerns over funding and cost-effectiveness. Additionally, India’s increasing oil imports from Russia amid geopolitical controversies have drawn criticism and complicated diplomatic relations. Transparency issues regarding reserve management also limit public scrutiny, raising debates about the efficacy and preparedness of India’s strategic petroleum reserves policy. Nonetheless, India’s multipronged approach aims to strengthen resilience against future supply shocks and secure its energy future amid evolving global dynamics.
Background
India’s journey toward establishing strategic petroleum reserves (SPR) is rooted in its experience with energy insecurity, notably during the 1990 Gulf War when the country’s oil reserves could sustain consumption for only three days. This crisis underscored the vulnerability of India’s energy supply and the pressing need for a buffer against external disruptions. In response, the government under Atal Bihari Vajpayee proposed the creation of strategic petroleum reserves in 1998 as a critical measure to enhance national energy security.
Geographically, India’s strategic oil storages are positioned along the east and west coasts, facilitating easy access to refineries and serving as supplementary reserves in addition to the storage capacity maintained by oil companies. These reserves are designed to provide a cushion during supply interruptions arising from geopolitical tensions or other external factors.
India’s energy security strategy is multi-faceted, encompassing diversification of crude oil sources and long-term bilateral agreements with major oil-producing nations such as Saudi Arabia, Iraq, and Russia. This approach aims to reduce overreliance on any single region and ensure stable crude imports. Notably, since Russia’s invasion of Ukraine in 2022, India has significantly increased its oil imports from Russia, reshaping its energy import landscape and geopolitical ties.
In parallel, India is investing in boosting domestic exploration and production, exemplified by the development of the KG-DWN-98/2 block in the Krishna Godavari basin by ONGC, which involves a capital expenditure of approximately US$5.07 billion and aims to produce substantial quantities of oil and natural gas at competitive costs.
The expansion of strategic reserves continues, with the government approving new facilities such as the 2.5 million metric tons capacity site at Padur, reflecting an ongoing commitment to fortify the country’s preparedness against future supply shocks. Experts emphasize the importance of building these strategic buffers not only to respond effectively during conflicts but also to maintain resilience in periods of geopolitical instability, which can impact inflation, fiscal policies, and economic confidence.
Comparative studies of strategic petroleum reserves worldwide highlight India’s evolving reserve management in the context of global best practices, emphasizing legislation, reserve layout, and financing mechanisms tailored to its unique energy security challenges. Collectively, these efforts underscore India’s bold move to ramp up its strategic oil reserves as a cornerstone of its broader energy security framework.
Government Initiatives
India has undertaken several strategic initiatives to enhance its energy security through the establishment and expansion of Strategic Petroleum Reserves (SPRs). Recognizing the vulnerabilities exposed during the 1990 Gulf War, when the country had oil reserves sufficient for only three days, the Indian government initiated the development of SPRs to mitigate risks related to global supply disruptions. The idea was formally proposed in 1998 under the administration of Atal Bihari Vajpayee, marking a significant step towards ensuring long-term energy resilience.
The Indian Strategic Petroleum Reserves Limited (ISPRL), a wholly owned subsidiary of the Oil Industry Development Board (OIDB) under the Ministry of Petroleum and Natural Gas, was created in 2004 as the nodal agency responsible for the management and maintenance of these reserves. ISPRL oversees underground storage facilities built in strategically selected locations, initially including Visakhapatnam, Mangalore, and Padur, with a combined storage capacity of 5.33 million metric tonnes (MMT), constructed at an investment of approximately $600 million.
To comply with the International Energy Agency’s (IEA) requirement that member countries maintain emergency reserves equivalent to at least 90 days of net oil imports, India became an associate member of the IEA in 2017, reflecting its commitment to international energy collaboration and standards. The government leveraged favorable market conditions in April-May 2020, when crude oil prices were low, to fill existing SPR facilities to full capacity, resulting in significant notional savings estimated around INR 5000 crore.
Further expansion plans have been approved to enhance the country’s emergency preparedness. The second phase of SPR development includes the construction of two additional underground storage facilities: a 4 MMT capacity site at Chandikhole in Odisha and a 2.5 MMT capacity site at Padur in Karnataka. These projects will increase the overall strategic reserve capacity to nearly 11.83 MMT and extend emergency stockpile cover from 12 to 22 days. Additionally, there are plans to double the capacity at Padur and explore further expansion at Bikaner in Rajasthan and Rajkot in Gujarat, with facilities operating under a Public-Private Partnership (PPP) model.
The SPR infrastructure, including storage caverns, Single Mooring Points (SPMs), and onshore/offshore pipelines, is constructed with a long-term concession period of 60 years, after which ownership and operations will revert to the Government of India. This strategic build-up is part of a broader energy security strategy that also includes diversifying crude oil import sources beyond the Middle East to regions such as Africa and the Americas, as well as boosting domestic exploration and renewable energy capacities to reduce import dependence.
Through these concerted government initiatives, India aims to strengthen its resilience against potential oil supply shocks, support sustainable economic growth, and contribute to the vision of a developed nation by 2047.
Infrastructure and Technology
India’s strategic petroleum reserves (SPRs) infrastructure is primarily composed of underground storage facilities built in unlined rock caverns. These caverns are located at key coastal sites including Mangaluru, Visakhapatnam, and Padur, with a total storage capacity of 5.33 million metric tons (MMT), equivalent to 36.92 million barrels, sufficient to meet approximately 9.5 days of the country’s crude oil consumption. The initial phase of development, initiated under the Atal Bihari Vajpayee administration in 1998, involved an investment of around $600 million to establish these caverns as a long-term solution for oil market stability.
The Indian Strategic Petroleum Reserve Limited (ISPRL), a wholly owned subsidiary of the Oil Industry Development Board (OIDB), operates and maintains these facilities as custodian of sovereign crude oil reserves and other government-mandated stocks. ISPRL coordinates the release and replenishment of strategic stocks through a government-empowered committee during supply disruptions.
Following the success of Phase I, the government approved a Phase II expansion to augment storage capacity significantly. This includes the construction of additional underground rock cavern facilities at Chandikhole (Odisha) and the expansion of capacity at Padur, which will increase the total reserve capacity to approximately 11.83 MMT. New facilities under Phase II are also planned at Bikaner in Rajasthan and Rajkot in Gujarat, with the government directing Engineers India Ltd (EIL) to prepare detailed feasibility reports for these sites. Notably, the Bikaner facility will utilize salt caverns in the desert region, an innovative approach to strategic oil storage in India’s geographical context.
The infrastructure plan incorporates modern technological advancements including the installation of dedicated Single Point Moorings (SPMs) for direct crude oil import at the new SPR sites. These SPMs enable offshore tankers to offload crude oil efficiently to the underground caverns via offshore and onshore pipelines, streamlining supply chains and reducing turnaround times. The Chandikhole SPR facility is designed to have a capacity of 4 MMT, while the Padur expansion will add 2.5 MMT, both equipped with associated pipeline infrastructure to enhance operational flexibility.
Moreover, the SPR facilities are developed under a Public-Private Partnership (PPP) model, where the concessionaire manages the reserves and infrastructure over a 60-year concession period before transferring ownership back to the government. This model ensures sustained investment, advanced maintenance, and operational expertise while safeguarding national energy security interests.
Through these infrastructure and technological advancements, India aims to extend its strategic crude oil reserve capacity to provide up to 90 days of coverage, significantly strengthening its energy security and resilience against geopolitical uncertainties and supply disruptions.
Implementation Strategy
India’s strategy to enhance its strategic petroleum reserves (SPR) involves a multiphase approach emphasizing capacity expansion, geographic diversification, and public-private partnerships (PPP). The government has approved the development of new SPR facilities with a combined capacity of 6.5 million metric tons (MMT), specifically at Chandikhole in Odisha (4 MMT) and Padur in Karnataka (2.5 MMT), employing underground rock cavern technology. These sites will also feature dedicated Single Point Moorings (SPMs) and associated pipelines to facilitate crude oil imports efficiently.
A key aspect of the implementation is the involvement of public sector oil companies alongside private entities under the PPP model. This approach aims to leverage private sector efficiencies and reduce government expenditure, while maintaining sovereign control. The 60-year concession period for these facilities mandates the eventual transfer of infrastructure back to the government, ensuring long-term asset ownership. Bidders are evaluated based on the lowest requirement of federal financing or highest premium offered, with the government providing up to 60% of the capital cost for projects such as the Padur SPR, estimated at approximately ₹55 billion ($659 million).
To enhance energy security further, the government is diversifying crude oil sourcing from multiple regions including the Middle East, Africa, and the Americas, thus reducing reliance on any single geography. This diversification complements the expansion of reserve capacity and helps mitigate risks arising from geopolitical tensions and potential supply disruptions, such as those linked to the Strait of Hormuz, a critical chokepoint for global oil shipments.
The implementation strategy also incorporates a gradual increase of India’s reserve capacity to a target of 90 days of consumption, which would significantly bolster the country’s ability to withstand supply shocks. Detailed feasibility reports are being prepared for additional reserve sites, including proposed locations in Mangalore and salt caverns in Bikaner, Rajasthan, which are strategically close to coastal refineries and infrastructure.
Moreover, the Indian Strategic Petroleum Reserves Ltd (ISPRL) functions as the custodian of these strategic reserves, overseeing the coordinated release and replenishment of crude stocks during disruptions. ISPRL is also authorized to lease or rent up to 30% of the existing storage capacity to Indian or foreign companies, while reserving the government’s first right to access the crude in emergencies. This commercialization effort aims to optimize asset utilization without compromising national energy security.
Emergency Preparedness and Energy Security
India has undertaken significant measures to strengthen its energy security through the expansion and strategic management of its petroleum reserves. The government approved the next phase of enlarging its Strategic Petroleum Reserves (SPR), which includes establishing a new 2.5 million metric tonnes (MMT) capacity facility at Padur, augmenting the country’s ability to withstand potential supply disruptions. These reserves are maintained by Indian Strategic Petroleum Reserves Ltd. (ISPRL), a Special Purpose Vehicle established in 2004 under the Ministry of Petroleum & Natural Gas to oversee the construction and operation of strategic crude oil storage.
Currently, India’s SPR facilities are located at three underground sites—Mangalore, Visakhapatnam, and Padur in the Udupi district of Karnataka—with a combined capacity of approximately 5.33 MMT of crude oil, sufficient to cover around 10 days of consumption. The government’s vision includes expanding this capacity further to 6.5 MMT through additional commercial-cum-strategic facilities operating under Public-Private Partnership (PPP) models. Under these arrangements, the concessionaire manages the infrastructure, including Single Mooring Points (SPMs) and pipelines, for a 60-year concession period before transferring it back to the government.
India’s energy security strategy also emphasizes diversification of crude oil sourcing to reduce overdependence on any single region. Public sector oil companies procure crude from the Middle East, Africa, and the Americas, thus mitigating risks associated with geopolitical tensions in specific areas. Given that about 20 percent of global oil shipments pass through vulnerable chokepoints such as the Strait of Hormuz—critical for India-bound crude—India remains cautious about disruptions that could severely impact its energy supplies and economy.
India’s status as an associate member of the International Energy Agency (IEA) since 2017 further aligns its strategic reserves policy with international standards. The IEA framework requires member countries to maintain emergency reserves equivalent to at least 90 days of net oil imports, and allows coordinated releases of these stocks during severe supply disruptions to stabilize markets. In this context, India is working towards achieving a similar 90-day reserve benchmark through policy reforms that encourage private sector participation and commercialization, a strategy modeled on systems in Japan and South Korea where private lessees actively trade crude within the strategic reserves framework.
Historically, India’s urgency to build strategic reserves was triggered by the 1990 Gulf War, which exposed the vulnerability of the country’s oil supply, then limited to only three days of reserves. Since then, successive governments have pursued policies to bolster preparedness, recognizing that sustained geopolitical instability—even without open conflict—can strain inflation, fiscal policy, and economic sentiment. Experts underscore the importance of not just reacting to crises but building strategic buffers across oil, defense, and other critical sectors to enhance peacetime resilience.
In addition to expanding reserves, India is also enhancing energy security through long-term bilateral agreements with oil-producing countries such as Saudi Arabia, Iraq, and Russia, aimed at ensuring stable supplies. Concurrently, efforts to boost domestic exploration and production, alongside expanding renewable energy capacity, seek to diversify India’s overall energy mix and reduce dependence on fossil fuels over the long term.
Together, these multifaceted strategies demonstrate India’s comprehensive approach to emergency preparedness and energy security, positioning the country to better manage future global energy uncertainties and supply disruptions.
Challenges and Criticisms
India’s efforts to expand its Strategic Petroleum Reserves (SPR) face several challenges and criticisms, primarily stemming from geopolitical risks, logistical complexities, and economic considerations. One significant concern is the ongoing geopolitical instability in regions crucial to global energy supplies, such as the Strait of Hormuz, which handles about 20 percent of global oil shipments, including a large portion of India-bound crude. Any disruption in this chokepoint could severely impact India’s
Future Prospects
India is actively pursuing an ambitious expansion of its strategic petroleum reserves (SPR) to enhance energy security and emergency preparedness in the face of growing domestic consumption and global geopolitical uncertainties. The government has commissioned detailed feasibility reports for establishing new reserves at six potential sites, including locations near the coast such as the Mangalore Special Economic Zone in Karnataka and salt caverns in Bikaner, Rajasthan. These efforts aim to increase the country’s crude oil backup capacity to cover 90 days of consumption, a significant rise from current levels.
This expansion builds upon the existing underground SPR facilities at Mangalore, Padur, and Visakhapatnam, which were developed during the initial phase. Additionally, two more strategic reserves at Bikaner and Chandikhole have been announced, further diversifying the geographical spread of these critical infrastructures. The government has also approved a new 2.5 million metric tonnes (MMT) capacity facility at Padur as part of the next phase of SPR expansion.
India’s strategic approach includes leveraging favorable market conditions to maximize reserve capacity. For instance, the country capitalized on the dip in crude oil prices in April-May 2020 to fill existing SPR facilities to full capacity, resulting in substantial notional savings estimated at around INR 5000 crore. This tactical move underscores the importance of economic timing in India’s energy strategy.
Moreover, India’s broader energy security framework involves diversifying its crude oil sourcing to reduce dependence on any single region. Public sector oil companies now procure crude from the Middle East, Africa, and the Americas, balancing geopolitical risks associated with concentrated supply chains. Long-term bilateral agreements with key oil-producing nations like Saudi Arabia, Iraq, and Russia complement these diversification efforts by ensuring stable and reliable supplies.
Looking ahead, India’s increasing oil import dependency—potentially positioning it as the world’s largest crude oil importer by 2040 if current trends persist—heightens the strategic importance of robust petroleum reserves. While the nation expands its renewable energy capacity to diversify its energy mix and reduce fossil fuel reliance, the role of SPRs remains critical to buffer against supply disruptions and geopolitical volatility. Continued vigilance in managing these reserves and adapting to evolving global energy dynamics will be essential for maintaining India’s energy security in the coming decades.
