The government is moving forward with a second phase of strategic petroleum reserves, adding 6.5 million tonnes of storage capacity in Odisha and Karnataka. This Rs 14,527 crore project uses a public-private partnership model to strengthen energy security against global supply shocks.
Detailed Coverage
India is accelerating its energy security plans by moving ahead with the second phase of its Strategic Petroleum Reserve (SPR) project. The government has cleared an investment plan worth Rs 14,527 crore to create an additional 6.5 million tonnes of crude oil storage capacity. This development is crucial for India, as it remains a major importer of crude oil and seeks to protect its economy from volatile global supply chain disruptions.
The project will be executed through a public-private partnership model. Under this structure, the government has capped its viability gap funding, which is a grant provided to make infrastructure projects economically viable, at 60% of the total project cost. This approach is intended to attract private investment while ensuring the government remains a core participant in building this critical infrastructure.
New Infrastructure in Odisha and Karnataka
The expansion focuses on two strategic locations. A 4-million-tonne facility will be constructed in Odisha, while a 2.5-million-tonne facility is planned for Karnataka. These new sites will add to the existing Phase-I infrastructure already in operation. The first phase of the program, managed by the state-owned Indian Strategic Petroleum Reserve Ltd (ISPRL), comprises facilities in Visakhapatnam, Mangaluru, and Padur, which provide a total storage capacity of 5.33 million tonnes. These original facilities were commissioned between 2016 and 2018 and have served as the country’s primary energy buffer.
Diversification of Energy Sources
Beyond building physical storage, the Ministry of Petroleum and Natural Gas is also focusing on supply-side resilience. Official data indicates that India has significantly widened its crude oil procurement, increasing its sourcing partners from 27 to 41 countries. A similar trend is visible in its Liquefied Natural Gas (LNG) sourcing, which has expanded from six to 15 countries. By diversifying the nations from which it imports fuel, India aims to reduce the risk associated with relying on any single region for its energy needs.
Strategic Importance and Future Monitorables
The government is also emphasizing a broader energy transition by promoting natural gas, ethanol, biodiesel, and compressed natural gas (CNG) to lower the nation's overall dependency on imported crude. For investors, the key monitorable will be the pace of project execution under the public-private partnership model. Future updates from the Ministry of Petroleum and Natural Gas regarding the bidding process for private partners, the finalization of land acquisition, and timelines for the commencement of construction will be important to track as these factors will determine the project's financial efficiency and operational impact on the energy sector.