India Approves ₹14,527 Crore Phase-II Strategic Oil Reserve Expansion Under PPP Model

The Indian government will develop the second phase of its Strategic Petroleum Reserve (SPR) programme at an estimated cost of ₹14,527 crore through a public-private partnership (PPP) model. Government viability gap funding (VGF) will be capped at 60% of the total project cost.

Approved in July 2021, the expansion will create 6.5 million tonnes of combined commercial and strategic crude oil storage. The new facilities will be built in Odisha with a capacity of 4 million tonnes and Karnataka with 2.5 million tonnes, Minister of State for Petroleum and Natural Gas Suresh Gopi informed the Lok Sabha.

Government Expands Energy Security Strategy

The Centre said it is continuously assessing additional locations for future strategic petroleum reserves to strengthen India's energy security.

Under Phase-I, Indian Strategic Petroleum Reserve Ltd (ISPRL) established storage facilities with a combined capacity of 5.33 million tonnes at Visakhapatnam, Mangaluru and Padur between 2016 and 2018. Unlike the upcoming phase, Phase-I was developed without direct budgetary support.

ISPRL has also signed an agreement allowing Abu Dhabi National Oil Company (ADNOC) to use a 750,000-tonne storage cavern at Mangaluru. The two sides have additionally entered into a non-binding memorandum of understanding for broader strategic cooperation.

India Diversifies Crude Sourcing To Reduce Import Risks

The government said it has expanded crude oil imports from 27 countries to 41 countries, while LNG sourcing has increased from six countries to 15 countries. This diversification is intended to lower dependence on any single supplier, region or transit route and improve resilience against supply disruptions and market volatility.

Besides expanding strategic reserves, the Centre is promoting natural gas, CNG, PNG, ethanol, compressed biogas, biodiesel, refinery efficiency improvements, energy conservation and higher domestic oil and gas production to reduce reliance on crude oil imports.

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