India is building two strategic petroleum storage facilities in Odisha and Karnataka to boost energy security. Officials said the Chandikhol project is gradually inching ahead after years of delay. Experts noted that the expansion needs to be expedited, as "the expansion is going slow and needs to be expedited."
India is setting up two facilities for commercial-cum-strategic storage of 6.5 million tonnes at Chandikhol in Odisha and Padur in Karnataka under Phase-2
Even as the recent West Asia conflict has impressed upon India to immediately double the capacity of domestic strategic petroleum reserves (SPRs) and scout for locations overseas, analysts and officials emphasise on fast tracking the current projects in Odisha and Karnataka.
India is setting up two facilities for commercial-cum-strategic storage of 6.5 million tonnes (mt) at Chandikhol (4 mt) in Odisha and Padur (2.5 mt) in Karnataka under Phase-2.
Sources said the SPR at Chandikhol is now "gradually inching ahead" with finalisation of "certain commercial terms" with Abu Dhabi National Oil Company (ADNOC) being discussed. Around 400 acres of land has been handed over for the project, which has been languishing for nearly 8 years.
State-run ONGC is also developing a 1.75 mt SPR at Mangalore. That apart, two new locations in Bina (Madhya Pradesh) and Bikaner (Rajasthan) have been identified for crude oil, LNG and LPG storage, with feasibility studies going on, said one of the sources.
"Besides, for stockpiling crude oil in foreign locations, India has tied up with the UAE through an MoU (May 2026). It is also in talks with Japan for deepening cooperation in strategic fuel reserves (July 2026)," the source added.
Manas Majumdar, Partner and Leader Oil & Gas, Fuels & Resources at PwC India, said the phase-2 expansion is being done in public private partnership (PPP)mode at capex of around ₹15,000 crore, with involvement of Megha Engineering, ADNOC and the Centre with a Voluntary Gap Funding (VGF) of close to 60 per cent.
"Even with government support the expansion is going slow and needs to be expedited given the increased geopolitical turmoil over recent years," he told businessline.
There is material impact of having enhanced petroleum buffer, Majumdar stressed, adding that India's annual crude import bill was around $150 billion last year and crude basket has jumped from around $90 per barrel to over $110. This is more than 20 per cent increase, which would mean an increase of $20-30 billion in the import bill (depending on how much India actually imports).
Having crude storage would have ensured availability at lower price when it was filled than what would have been procured at current high prices, he pointed.
So clearly, there is an incentive to expedite SPR Phase-2, sort out land acquisition issues, explore salt caverns in Madhya Pradesh, Rajasthan and also commercial lease and sale models to bring in more private players to develop SPRs, Majumdar added.