New strategic oil reserves planned! India looks to boost emergency stockpile of petroleum; aims to strengthen energy security

India is currently evaluating plans to construct three additional strategic oil storage facilities to enhance its emergency reserves and bolster energy security, according to the chief executive of the organisation responsible for strategic reserves.

Currently, India maintains strategic petroleum storage facilities at three southern locations - Mangalore, Padur and Vizag - with a combined capacity to store 5.33 million tonnes of crude oil, which can be utilised during supply interruptions.

As the globe's third-largest oil importer and consumer, India brings in over 80% of its oil requirements from abroad. The country continuously seeks to diversify its crude procurement sources to reduce vulnerability to geopolitical disruptions in its oil supply chain.

Also Read | US plans ‘economic bunker buster’ bill: Will Donald Trump impose 500% tariff on countries importing oil from Russia? How it may impact India

India’s Strategic Oil Reserves Plan

• Engineers India Ltd , a state-operated engineering consultancy firm, is conducting feasibility assessments for constructing additional petroleum reserves, according to Indian Strategic Petroleum Reserve Ltd's CEO L R Jain in his statement to Reuters. "In case of exigencies, we will be better prepared," he said.
• The organisation intends to establish a new reserve with 5.2 million-5.3 million tonne capacity in salt caverns at Bikaner, situated in Rajasthan's desert region, alongside an additional 1.75-million tonne facility in Mangalore, Karnataka, he indicated to Reuters.
• A new reserve will be established in Bina, situated in central Madhya Pradesh state, with its storage capacity pending determination.
• The proposed projects will need to secure approval from the Union cabinet following completion of feasibility assessments.
• These facilities will supplement the previously sanctioned strategic petroleum reserves : a 2.5 million-ton facility at Padur and a 4 million-ton installation at Chandikhol in eastern Odisha state.

India’s Strategic Oil Reserves Policy
India has modified its strategic petroleum reserve policies, introducing private sector participation and commercialisation. This approach aligns with systems implemented by Japan and South Korea, where private lessees, predominantly oil companies, are permitted to trade crude.

"We are looking for 90 days of reserves," Jain said. "And Indian fuel demand is also rising, so we need additional storage."

The expansion of oil storage facilities would facilitate India's membership in the International Energy Agency, which stipulates that members maintain oil reserves sufficient for 90 days of consumption.

Currently, India's combined storage capacity, including company holdings and in-transit supplies, can sustain the country's fuel requirements for 75 days.

Also Read | India laps up discounted crude: RIL, Nayara Energy get big chunk of Russia’s flagship oil exports; Reliance world’s single biggest buyer of Urals