India’s Oil Buffer Under Strain: Gaps in Strategic Petroleum Reserves

Why in News ?

India’s Strategic Petroleum Reserves (SPRs) are currently operating at only 64% capacity, holding about 3.37 million tonnes out of a total 5.33 million tonnes, raising concerns over the country’s preparedness against global supply shocks amid ongoing geopolitical tensions.

Background and Context

India is the third-largest consumer of crude oil globally and relies heavily on imports :

• Over 88% of crude oil demand is met through imports

This makes India highly vulnerable to :

• Global price fluctuations
• Supply disruptions
• Geopolitical conflicts

What are Strategic Petroleum Reserves (SPRs) ?

• Dedicated stockpiles of crude oil maintained by governments
• Used as a buffer during emergencies such as :
  • War
  • Supply disruptions
  • Price shocks
• Distinct from :
  • Routine commercial reserves held by oil companies

Historical Evolution of SPRs

• Concept emerged after the 1973 Oil Crisis
• Countries realised the need for : 
  • Energy security
  • Strategic stockpiling

Global Practice :

• Major economies like : 
  • United States
  • China
  • Japan
    Maintain large SPRs as part of national security strategy

India’s SPR Infrastructure

Managed by Indian Strategic Petroleum Reserve Limited, a subsidiary of the Oil Industry Development Board.

Existing Facilities :

• Visakhapatnam (Andhra Pradesh) – 1.33 MMT
• Mangaluru (Karnataka) – 1.50 MMT
• Padur (Karnataka) – 2.50 MMT

Total Capacity : 5.33 million tonnes

Coverage :

• At full capacity → ~9.5 days of crude oil requirement

Planned Expansion

Government-approved additional reserves (2021) :

• Chandikhol (Odisha) – 4 MMT
• Padur expansion (Karnataka) – 2.5 MMT

Proposed Sites :

• Bikaner (Rajasthan)
• Rajkot (Gujarat)

Status : Pending decisions or incomplete implementation

Key Gaps and Concerns

1. Inadequate Storage Levels

• Only 64% capacity utilisation
• Weakens buffer against shocks

2. Low Coverage Duration

• SPRs cover only ~9.5 days
• Far below global standards

3. Delayed Expansion Projects

• Planned facilities yet to be operational
• Reduces preparedness

4. High Import Dependence

• Over 88% reliance increases vulnerability

IEA Benchmark: Global Comparison

• International Energy Agency recommends : 
  • 90 days of net import cover

India’s Position :

• Total reserves (including commercial stocks) :
  • ~74 days
• India is an associate member, not legally bound but expected to align

Strategic Importance in Current Scenario

The ongoing West Asian conflict has disrupted :

• Oil supply chains
• Shipping routes such as the Strait of Hormuz

Implication :

• Increased urgency to strengthen oil buffers

Commercial and Strategic Potential

1. Market Leverage

• Buy oil at low prices
• Sell during high prices
• Enhances strategic and economic gains

2. Leasing Storage Capacity

• Example :
  • Agreement with Abu Dhabi National Oil Company
• ADNOC uses storage at Mangaluru :
  • ~7,50,000 tonnes

Benefits:

• Revenue generation
• Improved global energy integration

Significance of SPRs

1. Energy Security

• Ensures supply during disruptions

2. Economic Stability

• Prevents inflation due to oil shocks

3. Strategic Autonomy

• Reduces dependence on volatile markets

4. Crisis Management Tool

• Acts as emergency reserve

5. Geopolitical Leverage

• Enhances India’s global standing

Way Forward

• Accelerate completion of planned SPR projects
• Increase storage capacity to meet global benchmarks
• Improve utilisation of existing reserves
• Diversify : 
  • Energy sources
  • Import partners
• Strengthen public-private participation in storage infrastructure.