As the West Asia conflict disrupts critical energy flows, India’s strategic petroleum reserves (SPR) have just six days of crude stockpiles. budget data show that against an allocation of 5,876 crore in the current financial year to fill and expand the SPR, the government is likely to spend only1,039 crore, while provisioning for the next fiscal has been cut to just 200 crore.
The underspending comes at a time when the Strait of Hormuz — through which nearly 40% of India’s crude imports are routed — has been severely impacted by geopolitical tensions. In a written reply to the Rajya Sabha, Minister of State for Petroleum and Natural Gas Suresh Gopi said, “Currently, ISPRL (Indian Strategic Petroleum Reserves Limited) has around 3.372 million tonne of crude stock available which is around 64% of the total storage capacity.”
The country’s three underground reserves at Visakhapatnam, Mangaluru and Padur can together hold 5.33 million tonne (MT), translating to about nine-and-a-half days of crude cover at full capacity. With inventories currently at around two-thirds, the effective buffer is significantly lower. Gopi noted that reserves are not static.
“The actual reserve is a dynamic number depending on the stocks and actual consumption, both of which are not static,” he said. For a country that imports over 88% of its crude requirements, the gap is significant. Even though India’s total oil and fuel stockpiles — including commercial inventories — stand at about 74 days, this remains below the 90-day benchmark recommended by the International Energy Agency (IEA).
Audit findings flag structural weakness
Audit findings have already flagged structural weaknesses in the system. The Comptroller and Auditor General (CAG) observed that storage capacity of 5.33 MT provides only 7.88 days of import cover (March 2024) against the 19 days of import cover as envisaged in Phase-I of the IndianStrategic Petroleum Reserves.
The audit noted that “significant delays and consequent cost overruns were witnessed in construction and creation of strategic oil reserves” and that “utilisation of caverns has also been sub-optimal.” It recommended that authorities “ensure that the caverns are utilised fully to provide the cover against the oil shortage event.”
The current situation marks a stark contrast to 2020, when India moved aggressively to secure energy security at low cost. Taking advantage of a collapse in global oil prices during the Covid-19 pandemic, the government purchased 16.71 million barrels of crude in April-May 2020 at an average price of $19 per barrel, compared with about $60 per barrel earlier that year.
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The move resulted in savings of $685.11 million (5,069 crore) and allowed India to fully fill its strategic reserves.
Since then, however, no comparable replenishment has been undertaken, leaving reserves partially filled despite rising geopolitical risks. Expansion plans have also lagged.
In July 2021, the government approved two additional SPR facilities — 4 MT at Chandikhol in Odisha and 2.5 MT at Padur in Karnataka — expected to add around 12 days of crude cover. However, progress has been slow, with the Padur expansion now slated for completion only by August 2030.
The Chandikhol project remains stalled
The Chandikhol project remains stalled, with land acquisition yet to be resolved. Officials said efforts are underway to accelerate progress. “The government is actively expediting both filling and expansion of strategic reserves, but these are complex projects involving land, logistics and procurement cycles,” said a senior official, requesting anonymity.
Analysts say the current situation underscores the need for a more proactive approach. “At a time when geopolitical risks are rising, maintaining reserves at sub-optimal levels increases vulnerability,” said an energy analyst. “Strategic reserves are meant for supply security, not timing the market. The lesson from 2020 was clear — act when opportunities arise.”
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Prime Minister Narendra Modi on March 23 informed the Lok Sabha that India held over 5.3 million tonne of SPR and was working to expand it further, alongside diversifying crude sourcing across 41 countries. However, the ongoing crisis has brought the spotlight back on preparedness.
With supply routes under stress and import dependence high, India’s partially filled reserves and delayed expansion plans risk weakening its energy security buffer — even as demand continues to grow.
For now, commercial inventories and diversified sourcing are cushioning the impact. But the current episode highlights a deeper policy challenge: ensuring that India’s strategic reserves are not just built, but fully utilised and ready — before the next disruption intensifies. |
