Key facts
- India plans to construct a new strategic petroleum reserve (SPR) facility in Mangaluru.
- Oil and Natural Gas Corporation (ONGC) will develop and fill the facility.
- The proposed underground cavern will have a capacity of 1.75 million metric tonnes.
- The investment for the project is estimated at ₹15,000 crore ($1.6 billion).
- The move is prompted by concerns over energy security and vulnerability to supply disruptions.
India is planning to construct a new strategic petroleum reserve (SPR) facility in Mangaluru, with the state-run Oil and Natural Gas Corporation (ONGC) tasked with its development and crude filling. This move, prompted by concerns over energy security and vulnerability to supply shocks, particularly following recent geopolitical events in the Middle East, aims to significantly boost the nation's emergency crude storage capacity.
The proposed underground cavern at Mangaluru will have a capacity of 1.75 million metric tonnes (MMT), which would expand India's current emergency crude storage capacity of 5.33 MMT by approximately one-third. ONGC, which already owns the land for the project, is expected to invest around ₹15,000 crore ($1.6 billion) for construction and filling the facility with crude oil at current prices. This marks the first time a state-run oil company will develop an SPR facility, as existing sites were government-funded and operated by Indian Strategic Petroleum Reserves Ltd (ISPRL).
India's current SPR capacity is considered modest compared to other major oil-consuming nations. The government revised its approach in 2021, allowing ISPRL to use half of the capacity for commercial purposes, including leasing storage to refiners or traders and trading stored crude. For future SPR expansions, a public-private partnership model has been approved, with Megha Engineering & Infrastructures Ltd securing a contract for the Padur facility. Large oil stockpiles are crucial for providing a buffer against supply disruptions and price volatility.