What are India’s strategic petroleum reserves and how they help secure Indian energy needs in case of any oil crisis resulting from escalating Middle East crisis, explained
On the night of 12th June, Israel launched a strategic military attack on Iran, leading to escalation of tensions in the Middle East. The global markets are concerned that the conflict may disrupt crude oil supplies. There are several countries, including India, that heavily rely on crude oil imports. However, India is in a strong position to tolerate any external shocks. The reason behind such sustainable supply of crude oil amid tensions is the consistent expansion of its Strategic Petroleum Reserves (SPR). The programme to stockpile crude oil predates Prime Minister Narendra Modi. However, since he took office, India’s SPRs have increased exponentially.
How India built a crude oil shield
The Indian Strategic Petroleum Reserve Limited (ISPRL) comes under the Ministry of Petroleum and Natural Gas. Currently, there are three facilities managed by ISPRL, located in underground rock cavern storage. The total capacity of ISPRL is 5.33 million metric tonnes (MMT) of crude oil. These facilities are located in Visakhapatnam, Mangaluru and Padur. Out of these, Padur holds the maximum stockpile of crude oil (2.5 MMT), followed by Mangaluru (1.5 MMT) and Visakhapatnam (1.3 MMT).
The main aim of building these reserves is to ensure energy security at the time of global geopolitical uncertainties. These reserves act as a buffer that can be used to meet crude oil demand in case there is a disruption in supply or a surge in prices in the market.
Notably, these storage facilities are built in underground rock caverns. These are considered to be one of the safest and most secure methods for storing hydrocarbons. From these storage facilities, crude oil can be supplied to the refineries via pipelines or coastal shipping.
Expansion of SPR under Modi government
While the concept of strategic reserves predated the Modi government, under his leadership, the programme has significantly expanded. In July 2021, the Union Cabinet approved construction of two more SPR facilities, which will increase the stockpile by 6.5 MMT. One of them is being constructed in Chandikhol, Odisha, and the other in Padur, Karnataka.
Earlier phases of the programme were funded entirely by the government. However, these two SPRs are being developed under a public-private partnership model. It has not only reduced the burden on the government but also allowed private investment in national energy security infrastructure.
In a reply in the Lok Sabha in March 2025, Minister of State for Petroleum Suresh Gopi confirmed that the aim of the expansion is to enhance India’s ability to counter external shocks. The government and oil marketing companies (OMCs) continuously assess the technical and commercial feasibility of increasing storage capacity further. He also pointed out that the government is identifying new sites for future reserves.
Diversified sourcing strategy
Not to forget, India is not only building reserves but also strategically diversifying its crude oil import sources. While the Middle East remains a significant supplier, Indian oil PSUs have also built strong ties with countries across Africa, North and South America, and the Asia-Pacific region.
Notably, India has signed long-term contracts with suppliers for liquefied natural gas (LNG) in Australia, the US, and the UAE. This diversification removes the risk of overdependence on any single region and provides a stable supply network.
Ethanol blending and alternative fuels
Another important aspect of making India less dependent on suppliers is the aggressive push for fossil fuel substitution through biofuels and gas-based energy. One such initiative is the Ethanol Blended Petrol (EBP) Programme. Under this programme, petrol is blended with ethanol to reduce crude import dependence. The government has set a target of a 20% ethanol blending rate in petrol by the end of 2025, which was earlier set at 2030.
According to data presented in Parliament, ethanol production has surged, specifically grain-based ethanol, which now accounts for 51% of the total output in 2023–24. The government has stated that concerns about food security are unfounded and that cereal production figures exceed domestic demand. Furthermore, there is enough buffer stock to fulfil the grain needs of India.
The ethanol industry is estimated to reduce carbon emissions by 10 million tonnes and save up to ₹40,000 crore annually on crude imports.
Strengthening clean fuel ecosystem
The government is also promoting Compressed Bio Gas (CBG), biodiesel, green hydrogen, and electric vehicles as part of a multi-layered clean energy strategy. The Sustainable Alternative Towards Affordable Transportation (SATAT) initiative aims to deploy CBG as a vehicle fuel, further reducing reliance on conventional petroleum products.
In the past decade, policy reforms and incentives have been rolled out to encourage domestic exploration and production of oil and natural gas. On the other hand, refiners are being pushed towards efficiency upgrades and greener processes. The idea is to transition from a petroleum-dependent economy to a cleaner, more diversified energy mix with security through a strategic stockpile.
Infrastructure, cost and management
The initial construction of the SPRs came at a cost of Rs 4,098 crore for the three operational sites. Padur was commissioned in December 2018, Mangaluru in 2016, and Visakhapatnam in 2015. An additional 0.3 MMT compartment at Visakhapatnam is utilised by Hindustan Petroleum Corporation Limited (HPCL) under a cost-sharing model, enhancing utility with marginal cost increase.
The reserves are managed by ISPRL. In times of disruption, the release and replenishment of stocks are overseen by an empowered committee of the Government of India.
Strategic relevance in a volatile world
India has proactively built and expanded its crude oil reserves and the process is still ongoing. This stockpile has become more crucial in the backdrop of escalating hostilities in the Middle East. Notably, a significant portion of the world’s oil flows through the Middle East, and even a partial disruption would have ripple effects across global energy markets.
In the event of a blockade or supply freeze, India has the ability to draw upon its SPRs for weeks or even months. It not only softens the blow of potential price shocks but also ensures that critical sectors of the economy do not face fuel shortages.
Conclusion
At a time when energy security is once again under the global spotlight, India stands out as a country that has quietly but effectively prepared for the worst. The visionary planning, strategic investment in infrastructure, and clear policy thrust on diversification and renewables have created a framework that insulates India from external shocks to a significant degree.
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