India has begun work on its first strategic natural gas storage system, a direct response to supply vulnerabilities exposed by the recent West Asia conflict, according to a July 5 report by The Hindu BusinessLine. The move expands the country's energy security planning beyond crude oil, which is managed by Indian Strategic Petroleum Reserves Limited (ISPRL). Public sector oil companies are now evaluating multiple storage options, including underground salt caverns and above-ground cryogenic LNG tanks.
Strategic Storage Initiative
The government's push follows concerns over India's reliance on the Middle East Gulf, which accounts for more than half of India's LNG and LPG imports, a source told The Hindu BusinessLine. A committee under the Petroleum Ministry, constituted after the West Asia conflict erupted, is evaluating storage options for both fuels. Additionally, one of the seven Empowered Groups of Secretaries set up by the government is examining short-, medium- and long-term measures to address potential disruptions to trade, supply chains and logistics.
"PSU oil companies are already working on the feasibility of storing crude oil and gas in salt caverns. ISPRL does not have expertise in salt caverns so a feasibility study is being done by Engineers India. Besides, storing gas in cryogenic overground tanks is also being worked out," a source said.
Supply Vulnerabilities and Options
India currently has no dedicated strategic natural gas storage despite importing nearly half of its gas requirement, according to a recent study by the Council on Energy, Environment and Water (CEEW). This leaves key sectors exposed to supply disruptions. Officials are evaluating a range of storage technologies and geological structures, including salt caverns, depleted gas fields, and cryogenic tanks near LNG regasification terminals.
| Storage Option | Description | Current Status |
|---|---|---|
| Salt caverns | Underground cavities for natural gas storage | Feasibility study by Engineers India |
| Cryogenic LNG tanks | Above-ground tanks at LNG terminals | Under evaluation |
| Depleted gas fields | Repurposed reservoirs | Being assessed |
"Some storage for gas has become important. The deliberations focus on what should be the storage volume keeping in view visibility over the next 4-5 years. Besides, another key issue to debate is that how much should be strategic and commercial considering storage buffers can also help monetise arbitrage opportunities like China does with its huge crude storage," another source said.
Implications for Global Gas Markets
The West Asia conflict has accelerated the timeline for new production facilities, with a focus on rebuilding damaged infrastructure such as Qatar's Ras Laffan facility, the source added: "The West Asia conflict has likely pushed ahead the schedule for these new production facilities with focus first on rebuilding damaged infrastructure like in Qatar's Ras Laffan facility. We need to factor all these issues." For commodity traders, India's move signals a structural shift in Asia-Pacific natural gas demand patterns as the country seeks to build strategic buffers. While no specific storage volumes or timelines have been announced, the feasibility studies and committee work indicate that India is moving toward a formal strategic gas reserve, which could influence global LNG trade flows and pricing dynamics over the medium term. The development also highlights the growing importance of energy security for major importers, potentially adding a new layer of risk assessment for traders monitoring supply disruptions in the Middle East.
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