India is ramping up its Strategic Petroleum Reserves (SPR) to target a 90-day buffer, aiming to lower its vulnerability to global oil supply shocks. The government has prioritized new facilities in Odisha, Madhya Pradesh, and Rajasthan, with Phase II projects approved at a cost of ₹14,527 crore. Investors are tracking how these large-scale infrastructure plans impact the capital spending and balance sheets of state-run oil companies.
India is aggressively moving to improve its energy security by expanding its Strategic Petroleum Reserves (SPR). Because India relies on imports for roughly 90% of its crude oil needs, the country is highly sensitive to global supply disruptions and price volatility. To reduce this risk, the government is aiming for a 90-day buffer of crude oil, which is the standard set by the International Energy Agency (IEA).
Currently, India’s existing storage facilities in Visakhapatnam, Mangaluru, and Padur offer a combined capacity of 5.33 million metric tonnes (MMT). This current capacity provides only about 8 to 9 days of protection against import interruptions. To bridge this gap, the government has launched an expansion program involving new storage projects across the country.
Key infrastructure developments are underway or being planned in Chandikhol in Odisha, Bina in Madhya Pradesh, and Bikaner in Rajasthan. The Chandikhol project is a significant part of this plan, with approximately 400 acres of land already acquired. Additionally, the government has directed ONGC to develop a 1.75 MMT storage facility in Mangaluru to further boost capacity.
Phase II of the SPR program, which was approved at an estimated cost of ₹14,527 crore, includes building substantial new storage at Chandikhol and Padur. These projects are being structured under a public-private partnership model. For investors, the development of these facilities is a critical monitorable, as these projects involve large capital spending requirements for the public sector oil companies involved.
Several factors may influence the success and impact of these projects. The primary risk is the potential for delays in project execution, land acquisition, and the finalization of commercial agreements. Furthermore, the volatility in global crude oil prices remains a constant pressure for oil marketing companies. Since these companies must manage their input costs and margins, any significant increase in spending for strategic reserves could influence their financial flexibility in the short term.
Investors may monitor the progress of these projects, specifically looking for updates on the request for proposals (RFP) process, the finalization of technical feasibility reports for the Bina and Bikaner sites, and any announcements regarding government financial support or viability gap funding. The timeline for commissioning these new caverns will be the most important factor in determining when India can achieve its goal of a more secure and resilient energy supply.