• India is accelerating construction of strategic petroleum reserves (SPRs) to cushion against crude price volatility.
  • New underground caverns and coastal storage sites are planned across multiple locations, expanding total capacity by millions of tonnes.
  • The expansion aligns with energy security goals amid high import dependence and global supply risks.

Pushing for Energy Security

India is ramping up its strategic petroleum reserve program, aiming to deepen emergency crude stockpiles and shield the economy from supply disruptions and price spikes. According to people familiar with the matter, the government is fast-tracking construction of new underground caverns and coastal storage facilities near refineries, with several sites in advanced stages of planning.

The expansion targets locations including Padur, Chandikhol, Mangalore, Bikaner, and Mangaluru, with total SPR capacity set to increase by multiple million tonnes over successive phases. The first phase is expected to add significant buffer within five to six years, with capital requirements running into thousands of crores. The government is pursuing a mix of public funding and public-private partnerships to finance and operate the facilities.

“India’s reliance on imported oil makes it vulnerable to global price swings, and a larger strategic reserve is key to insulating the domestic market,” a senior oil ministry official said, speaking on condition of anonymity. The program mirrors global trends, with major energy importers like China and Japan also expanding their strategic inventories.

Market and Policy Implications

A more robust SPR could dampen domestic price spikes during crises and reassure markets, potentially influencing import strategies and refining margins. The expansion also supports India’s broader energy security strategy and could aid its bid for International Energy Agency membership.

Enhanced reserves may strengthen India’s negotiating position with oil exporters and regional partners, signaling reliability during geopolitical tensions. However, the program has drawn scrutiny over fiscal costs and land acquisition for new sites. Environmental considerations and transparency around site selection remain points of public debate.

“The economic benefits of stable fuel prices during shocks need to be weighed against the upfront investment,” said a Delhi-based energy analyst. “But given the lessons from past supply disruptions, the move is widely seen as prudent.”

Stakeholders expect consumers to benefit from more stable fuel prices, while refiners and importers must adapt to policy shifts related to reserve operations. The government has not yet commented on specific financing details or timelines for individual sites.

International Context

India’s SPR push comes as other large consumers bolster their strategic reserves. The global trend toward larger inventories reflects heightened focus on energy security and diversification of storage locations, including coastal and inland salt caverns. Public-private partnerships are becoming common to fund such capital-intensive infrastructure.

A cabinet approval is expected soon for the next phase of sites, with feasibility studies already underway. Construction milestones will drive near-term capacity additions and have budgetary implications for the fiscal year ahead.