ONGC has received board approval for a new 1.75 million tonne strategic petroleum reserve at Mangaluru. This facility aims to strengthen India's emergency crude oil storage capacity amid global market volatility. Investors may track future updates on project costs and government funding.
The board of Oil and Natural Gas Corporation (ONGC) has given in-principle approval to develop a 1.75 million tonne strategic petroleum reserve at Mangaluru. This project is intended to act as a buffer for India's energy needs, as the country currently relies on imports for over 88% of its crude oil requirements.
Strategic Reserve Infrastructure and Role
Strategic petroleum reserves are underground storage facilities designed to protect the nation against sudden supply disruptions or extreme price spikes in the global oil market. Unlike the regular inventory maintained by oil marketing companies for daily operations, these reserves are specifically held for national energy security. The new facility will function as an extension of the existing infrastructure at Mangaluru.
While the company has confirmed the board's approval, it has not yet announced the total capital expenditure or the specific construction timeline for this project. The company plans to initiate discussions with the central government regarding the commercial model and operational aspects of the facility, which will also be subject to various regulatory and environmental clearances.
Context of India's Energy Storage Program
The project aligns with India’s broader effort to expand its total strategic storage capacity. The first phase of the national program already includes underground rock caverns at Visakhapatnam, Mangaluru, and Padur, which together hold approximately 5.33 million tonnes of crude oil. These assets are managed by Indian Strategic Petroleum Reserves Ltd (ISPRL), a specialized agency under the Oil Industry Development Board.
Beyond this new Mangaluru project, the government has previously sanctioned a second phase of expansion. This includes increasing capacity at the Padur site and building a new facility at Chandikhol in Odisha. For ONGC, the main investor monitorables will be the final project cost, the funding structure between the company and the government, and the potential impact on the company's long-term cash flow as it navigates this capital-intensive expansion.