The Strategic Petroleum Reserve (SPR) is a national concept and scheme involving the dedicated stockpiling of crude oil to serve as a buffer against sudden supply disruptions and price shocks. The concept originated globally after the 1973-1974 Arab oil embargo, which caused significant economic dislocation and highlighted the vulnerability of oil-importing nations. In India, the idea was proposed in 1998 by the Atal Bihari Vajpayee administration as a long-term solution for managing the oil market.
The mechanism is managed by the Indian Strategic Petroleum Reserves Limited (ISPRL), a wholly-owned subsidiary of the Oil Industry Development Board (OIDB) under the Ministry of Petroleum and Natural Gas. The crude oil is stored in highly secure, specialized underground rock caverns located near coastal refineries. In Phase I, India established a total storage capacity of 5.33 million metric tonnes (MMT) across three locations: Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), and Padur (2.5 MMT). This capacity covers approximately 9.5 days of India's crude oil requirements.
The SPR connects to the International Energy Agency (IEA), which mandates that its member countries maintain emergency oil stocks equivalent to at least 90 days of net imports. India is currently an Associate Member of the IEA.
The SPR scheme has changed recently with the approval of Phase II expansion in July 2021. This expansion involves establishing two additional commercial-cum-strategic facilities with a combined capacity of 6.5 MMT at Chandikhol (4 MMT) and an expansion at Padur (2.5 MMT). The key amendment is the shift from a purely state-funded model to a Public-Private Partnership (PPP) model for Phase II, which allows for private participation and commercial use of a portion of the reserve, aligning India with international practices. However, the government retains the first right to use the entire volume in case of an emergency.