Odisha project to beef up oil security in times of West Asia war

Public-sector firm seeks help from Independent MLA to start work

Companies usually seek the intervention of state governments or local administration to get issues related to their projects resolved. But a central public-sector company executing one of India’s most critical energy-security projects has approached a local legislator to help it resume work in Jajpur district, Odisha. 

Indian Strategic Petroleum Reserves Ltd (ISPRL), which is developing a 4-million-tonne underground strategic petroleum reserve (SPR) in Chandikhol, Dankari hill region, has written to Himanshu Sekhar Sahoo, Legislative Assembly member of Dharmasala, seeking his intervention to sort out land-related issues, including illegal stone quarrying, which threatens the upcoming crude oil-storage facility. 

“… The stalled project could be restarted after your personal intervention and the necessary approvals from the state government,” read the latest communication (a copy of which Business Standard has reviewed) from ISPRL to Sahoo. 

With the United States (US) escalating war with Iran, something which may hit oil reserves in countries like India, the proposed oil reserve is expected to play a big role in decentralising crude oil storage and strengthening energy security for the heavily industrialised eastern and Northeastern belts. 

Sources said the company approached the MLA because illegal stone quarrying continued unabated despite several communications with the Departments of Revenue and Disaster Management, Industries and Steel and Mines, besides the Minor Minerals Directorate and Jajpur collector. 

The state government is yet to hand over the 400 acres identified for the project. 

ISPRL, the wholly owned subsidiary of the Oil Industry Development Board, which functions under the Ministry of Petroleum and Natural Gas, has signed an agreement with the Odisha government to set up the SPR at ₹8,743 crore. 

In November last year, in a letter to the Jajpur collector, ISPRL had warned that continued quarrying inside the notified area would jeopardise the upcoming project of national importance and strategic significance if not stopped at the earliest. 

“Quarry activities within the area continue unabated despite environmental concerns, risking both the technical and economic viability of the project,” it stated. 

A source said: “There are 13 stone quarries in the proposed project area. Of those eight are ‘operational-inactive’ due to litigation and four are ‘operational-active’. One quarry is non-operational. While the lease period of three operational-active quarries ends in 2028, it expires in 2027 for another quarry.” 

The communication also provided a detailed update on the project’s progress. According to ISPRL, the proposal received approval from the High-Level Clearance Authority (HLCA) during its 38th meeting held on January 6 last year. This was followed by the signing of the memorandum of understanding (MoU) with Industrial Promotion and Investment Corporation of Odisha on January 28, 2025. 

Subsequently, another MoU was signed with the Odisha government in New Delhi on April 8, 2025. The company stated that, in accordance with the directions of the district administration, it had done topographic surveys, demarcated the boundary, and installed boundary pillars in the proposed project area. All preliminary work has been completed. 

After the district administration released the land, Odisha Industrial Infrastructure Development Corporation (Idco) raised a demand note of ₹21 crore as land cost. The amount has been deposited by ISPRL and preparing the lease deed is underway. 

In the communication to the MLA, the company said the main project tender was expected to be floated soon. The tender documents have been sent to the Public Private Partnership Appraisal Committee (PPPAC) for final recommendation and approval. The engineering design for the project has been finalised and frozen by Engineers India Ltd (EIL), a Government of India enterprise. 

ISPRL Chief Manager (Technical) R K Jena said the company was expecting the land by April. 

“Of the 400 acres required, Idco has started finalising the lease deed for 286 acres and the rest (will be done) in the next two months. Once the land is handed over, we will go for bidding. We will deploy security in the area from April. Construction is expected to start at least five months after the bidding,” he told Business Standard. 

The proposed project, which was stalled for over four years, gained momentum after the Bharatiya Janata Party came to power in the state in 2024. 

Sahoo, who has been elected as an Independent candidate, took up the matter with Chief Minister Mohan Charan Majhi, seeking his intervention to expedite handing over the land. 

“I have been following up with the state government for the project. The land has been demarcated and pillar posting completed. Hopefully, ISPRL will start the construction of the underground oil reserve soon,” Sahoo told Business Standard. Jajpur Collector Ambar Kumar Kar did not respond to calls for his comment. 

India operates 5.33 million tonnes (mt) of underground crude oil storage capacity, at three locations -- Visakhapatnam (1.33 mt), Mangalore (1.5 mt), and Padur (2.5 mt). These facilities together can meet roughly 10 days’ requirements. 

The Centre had approved two additional facilities in 2018. These facilities include a 4-mt reserve in Chandikhol and a 2.5-mt expansion in Padur, Karnataka. Once these projects are completed, India’s strategic petroleum reserves would be able to meet around 21 days’ emergency demand.