India to build three new strategic oil reserves to boost energy security

The new strategic oil reserves in Bikaner, Mangalore and Bina will boost emergency stockpiles, enhance energy security and aid India's push for International Energy Agency membership

The Indian government is considering setting up three additional strategic oil reserves to increase its emergency stockpile and enhance energy security, according to a Reuters report on Wednesday.

 

As the world’s third-largest importer and consumer of oil, India overwhelmingly relies on overseas sources for over 80 per cent of its crude requirements. To reduce supply shocks from geopolitical tensions across the world, India continues to diversify its crude import sources.

 

State-owned consultancy Engineers India Ltd is conducting feasibility studies for the new reserves, said L R Jain, chief executive officer of Indian Strategic Petroleum Reserve Ltd (ISPRL). “In case of exigencies, we will be better prepared,” he told Reuters.

   

Increasing its reserve capacity will also help India qualify for membership in the International Energy Agency, which requires members to maintain reserves equal to 90 days of oil consumption.

Current and proposed storage facilities

India already operates strategic reserves in Mangalore, Padur and Visakhapatnam in southern India, which together can hold around 5.33 million tonnes (MT) of crude oil. These reserves can be used to cushion the impact of any supply disruptions.

 

Now, plans are in place to build new reserves at three more locations:

• A 5.2–5.3 MT facility in salt caverns at Bikaner, Rajasthan
• A 1.75 MT site at Mangalore, Karnataka

 

A storage facility in Bina, Madhya Pradesh, whose capacity is yet to be determined

 

However, the proposed projects will require approval from the Union Cabinet after the completion of feasibility assessments. In addition to the proposed sites, two new reserves have already been approved:

• A 2.5 MT expansion at Padur
• A 4 MT facility at Chandikhol in Odisha

Private sector participation

India has revised its strategic reserves policy in recent years to allow private companies to participate and even trade oil commercially. This is similar to models in countries such as Japan and South Korea, where major oil firms lease storage space and handle trading.

 

“We are looking for 90 days of reserves,” said Jain. “And Indian fuel demand is also rising, so we need additional storage.” At present, India’s total oil storage — covering company-owned facilities and oil in transit — can meet about 75 days of fuel demand.