Unlearnt lessons: On India’s inadequate strategic petroleum and gas reserves

With the West Asia crisis disrupting Strait of Hormuz transit and pushing global crude prices higher, India's inadequate strategic petroleum and gas reserves...

What Happened

With the West Asia crisis disrupting Strait of Hormuz transit and pushing global crude prices higher, India's inadequate strategic petroleum and gas reserves have come under scrutiny, revealing that the country's buffer stockpile provides only about 9.5 days of consumption at full capacity — far short of the International Energy Agency (IEA) benchmark of 90 days of net import cover.
As of March 2026, India's strategic crude oil reserves stood at approximately 3.37 million metric tonnes (MMT) — around 64 per cent of total installed capacity of 5.33 MMT — held across three underground rock cavern facilities at Visakhapatnam, Mangaluru, and Padur.
The editorial argues that India's Phase II expansion plans (adding 2.5 MMT at Padur and 4 MMT at Chandikhole in Odisha) have moved slowly, and that no strategic natural gas reserves exist, compounding vulnerability for the fertiliser and power sectors that are heavily dependent on LNG from West Asia.
India's Associate Membership of the IEA (since 2017) requires it to work towards the 90-day reserve standard; critics argue this goal has not been translated into adequate investment or policy urgency.

Static Topic Bridges

IEA Strategic Reserve Standard and India's Associate Membership

The International Energy Agency (IEA), founded in 1974 following the first oil crisis, requires full member countries to hold emergency oil stocks equivalent to at least 90 days of the previous year's net imports. India formally activated "Association" status with the IEA on 30 March 2017, and has been pursuing full membership, which would obligate it to meet this 90-day requirement. Under the Association framework, India participates in collective emergency response mechanisms, including coordinated strategic reserve releases.

IEA was established under the OECD framework; current full members are predominantly developed economies.
India's 90-day equivalent requirement at current import levels would require roughly 90–100 MMT of crude in reserve — against an installed capacity of only 5.33 MMT.
The IEA recommends that at least one-third of reserves should be government-held; commercial stocks may count toward the balance.
In 2022, India participated symbolically in a coordinated IEA emergency release from strategic reserves to moderate post-Ukraine-war price spikes.

Connection to this news: India's 5.33 MMT capacity covers only 9.5 days at full capacity, an acute shortfall relative to the 90-day IEA benchmark, exposing the economy to severe price and supply shocks during a conflict-driven closure like the Strait of Hormuz disruption.

Indian Strategic Petroleum Reserves Limited (ISPRL)

ISPRL is a Special Purpose Vehicle under the Ministry of Petroleum and Natural Gas, established to construct, own, and operate India's strategic petroleum storage facilities. It is a wholly owned subsidiary of the Oil Industry Development Board (OIDB). The Phase I facilities — commissioned between 2014 and 2018 — are underground rock cavern storages, which are more secure and cost-effective in the long run than above-ground tankage.

Visakhapatnam (Andhra Pradesh): 1.33 MMT capacity
Mangaluru (Karnataka): 1.5 MMT capacity
Padur (Karnataka, near Udupi): 2.5 MMT capacity
Total Phase I operational capacity: 5.33 MMT (approximately 36.92 million barrels)
Phase II expansion: 2.5 MMT additional at Padur + 4 MMT at Chandikhole (Odisha) — pending completion
India explored leasing unused cavern space to foreign national oil companies (e.g., Abu Dhabi National Oil Company) to partially fill reserves at no cost to the government.

Connection to this news: At 64% utilisation (3.37 MMT), India's buffer provides roughly 5–6 days of consumption, critically below even the Phase I design potential, let alone the IEA standard.

Energy Security Frameworks and Strategic Gas Reserves

Energy security, as defined by the IEA, refers to the uninterrupted availability of energy sources at an affordable price. India imports approximately 87% of its crude oil, making it the world's third-largest oil importer. Unlike oil, India has no dedicated strategic natural gas reserve; LNG supply disruptions directly affect fertiliser production (urea), power generation, and city gas distribution. Around 86% of LNG required by India's fertiliser plants comes from West Asia.

India's oil import bill was approximately $132 billion in FY2024-25; dependence on West Asian crude is around 55–60%.
Natural gas accounts for nearly 80% of the cost of producing urea; LNG price spikes therefore amplify the fertiliser subsidy burden directly.
The Hydrocarbon Exploration and Licensing Policy (HELP, 2016) and the National Gas Grid (planned at 35,000 km) are domestic supply-side responses, but do not address strategic reserve gaps.
Strategic gas storage as a formal policy remains absent in India, unlike the EU's gas storage regulation which mandates 80–90% fill levels before winter.

Connection to this news: The absence of strategic gas reserves means that every West Asian conflict creates a direct pass-through to fertiliser costs and power prices, making the case for a parallel gas reserve mechanism alongside petroleum.

Key Facts & Data

India's total SPR capacity: 5.33 MMT across three sites (Phase I).
Current fill level (March 2026): approximately 3.37 MMT, or 64% of capacity.
Days of cover at full capacity: ~9.5 days; at current fill: ~5–6 days.
IEA benchmark: 90 days of net import cover.
India became an IEA Associate Member on 30 March 2017.
Phase II expansion: 2.5 MMT at Padur + 4 MMT at Chandikhole (Odisha) — approved but incomplete.
India imports ~87% of crude oil requirements; ~55–60% from West Asia.
West Asia supplies ~86% of LNG consumed by India's urea fertiliser plants.
ISPRL is a wholly owned subsidiary of the Oil Industry Development Board (OIDB), under the Ministry of Petroleum and Natural Gas.
Global crude transit through the Strait of Hormuz: approximately 20% of world oil supply.