State-run Oil and Natural Gas Corporation (ONGC) on Friday announced its board has granted in-principle approval for the development of a 1.75 million tonne strategic petroleum reserve at Mangaluru, according to a stock exchange filing. The facility, along with related infrastructure, will be developed as the Phase-I expansion of the existing strategic petroleum reserve at Mangaluru in Karnataka. This move enhances India's emergency crude oil storage capacity as the world's third-largest importer and consumer of crude oil, which relies on imports for more than 88 per cent of its crude oil requirements.
India's Strategic Petroleum Reserve Programme
India introduced its strategic petroleum reserve (SPR) programme to bolster the country's energy security by maintaining emergency crude oil stockpiles that can be utilised during supply disruptions or periods of sharp increases in global crude prices, as reported by ONGC. These reserves are maintained in addition to the operational crude inventories held by oil marketing companies and refiners.
Under the first phase of the programme, underground rock caverns with a total storage capacity of about 5.33 million tonnes were constructed at three locations:
| Location | State | Storage Capacity (First Phase) |
|---|---|---|
| Visakhapatnam | Andhra Pradesh | Part of 5.33 Mt |
| Mangaluru | Karnataka | Part of 5.33 Mt |
| Padur | Karnataka | Part of 5.33 Mt |
These facilities are managed by Indian Strategic Petroleum Reserves Ltd (ISPRL) , a special purpose vehicle operating under the Oil Industry Development Board.
Second Phase Expansion
The government has also cleared the second phase of the SPR programme, which includes expanding the storage facility at Padur and building a new strategic petroleum reserve at Chandikhol in Odisha. The objective is to substantially increase India's emergency crude oil storage capacity.
ONGC's New Approval Details
ONGC did not disclose the project's cost or implementation schedule in its filing. However, it noted the board has authorised the company to hold discussions with the central government on expanding the commercial use of the facility, subject to necessary regulatory approvals. The development comes against the backdrop of ongoing geopolitical uncertainty and fluctuations in global oil markets, particularly the ongoing Middle East situation, as highlighted by ONGC. Strategic petroleum reserves remain a key element of the country's energy security framework.
Implications for Commodity Markets
For commodity traders and analysts, the expansion of India's strategic reserves signals a long-term increase in crude oil storage capacity, which can influence market dynamics. Strategic stockpiles act as a buffer against supply disruptions, potentially reducing price volatility during geopolitical crises. India's growing import dependence—over 88%—means any major supply disruption could have significant price implications for global crude markets. The addition of 1.75 million tonnes (approximately 12.8 million barrels) will give India additional emergency buffer, though the timeline remains unclear until ONGC provides further details on costs and implementation. Traders will watch for updates on regulatory approvals and commercial use discussions, which could affect crude inventories and flows in the region.
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