One-third of India’s strategic petroleum reserves are empty: Why this matters for fuel security
360° Perspective Analysis
Deep-dive into Geography, Polity, Economy, History, Environment & Social dimensions — AI-powered, on-demand
Context
The Ministry of Petroleum has stated that India's Strategic Petroleum Reserves (SPRs) are currently holding only two-thirds of their 5.33 million-tonne capacity. This under-utilization raises significant concerns about India's energy security, especially with ongoing geopolitical conflicts in West Asia disrupting global supply chains. The situation highlights the gap between India's current strategic storage (9.5 days at full capacity) and the 90-day net import cover recommended by the .
UPSC Perspectives
Economic
The underfilled SPRs present a significant economic vulnerability for India, which imports over 88% of its crude oil. Energy security is a cornerstone of economic stability, and SPRs are a primary tool to mitigate price volatility and supply shocks. A robust reserve allows the government to release oil during crises, cushioning the economy from sudden price surges that can fuel inflation and widen the Current Account Deficit (CAD). The article also highlights a commercial dimension: the government has approved a policy to lease parts of the SPRs, as seen in the agreement with Abu Dhabi National Oil Company () at the Mangaluru facility. This commercialization helps generate revenue and reduces the net cost of holding reserves, but it requires a careful balance to ensure the primary strategic purpose is not diluted. The dynamic management of filling reserves—buying when prices are low and potentially selling when high—can also serve as a market stabilization tool.
Geopolitical & Strategic
From a strategic viewpoint, SPRs are an instrument of strategic autonomy in foreign policy. The heavy reliance on imports passing through volatile chokepoints like the makes India susceptible to external pressures and conflicts. While India is an associate member of the and not bound by its 90-day stockholding obligation, striving for this benchmark is crucial for credible deterrence against energy coercion. The IEA, formed after the 1973 oil crisis, coordinates collective action among member states during supply disruptions. India's participation in past coordinated releases, despite its non-obligated status, shows its role as a responsible global actor. Expanding SPR capacity is thus not just about domestic energy needs but also about strengthening India's position in global energy governance and its ability to navigate complex geopolitical crises without compromising its national interests.
Governance & Infrastructure
The implementation of the SPR program falls under the purview of the , a Special Purpose Vehicle (SPV) under the . The was established by the to promote self-reliance in the petroleum sector. The program's execution involves two phases. Phase I, which is operational, consists of three underground rock caverns at Visakhapatnam, Mangaluru, and Padur. Phase II aims to add 6.5 million tonnes of capacity at Chandikhol (Odisha) and through an expansion at Padur, but has faced delays. Recent updates suggest land acquisition has progressed, but financial allocations and construction timelines remain a challenge. The government is exploring a public-private partnership (PPP) model for Phase II to bring in private investment and operational expertise, indicating a shift in the financing and management strategy for this critical national infrastructure.