India Why Govt Wants ONGC To Build India’s Next ₹15,000 Crore Strategic Oil Reserve Adarsh SinghJune 19, 202602 views New Mangaluru Oil Storage Project Aims To Strengthen India’s Energy Security The Indian government has asked state owned Oil and Natural Gas Corporation (ONGC) to build the country’s next strategic petroleum reserve (SPR), a move that could significantly strengthen India’s ability to withstand global oil supply disruptions and price shocks. The proposed facility, a 1.75 million metric tonne (MMT) underground crude oil cavern at Mangaluru in Karnataka, is estimated to cost around ₹15,000 crore. Of this, nearly ₹5,000 crore is expected to be spent on constructing the cavern, while approximately ₹10,000 crore would be required to fill it with crude oil at current market prices. If completed, the project would increase India’s strategic petroleum storage capacity by nearly one-third, taking total capacity beyond the current 5.33 MMT. What Is A Strategic Petroleum Reserve? A strategic petroleum reserve is an emergency stockpile of crude oil maintained by governments to protect against supply disruptions, geopolitical crises, wars, sanctions, and sudden spikes in global oil prices. Unlike commercial inventories maintained by oil companies and refiners, these reserves are intended solely for national emergencies. They provide governments with the ability to release crude oil into the market during periods of severe supply stress. India stores its strategic reserves in underground rock caverns located near major ports and refinery hubs, ensuring rapid deployment when required. Flipkart Beats Amazon And Meesho In DAUs, Myntra Leads Fashion Apps: BofA READ MORE How Much Strategic Oil Does India Currently Have? India currently operates three strategic petroleum reserve facilities with a combined storage capacity of 5.33 MMT, equivalent to roughly 39 million barrels of crude oil. These facilities are located at: Visakhapatnam, Andhra Pradesh – 1.33 MMT Mangaluru, Karnataka – 1.5 MMT Padur, Karnataka – 2.5 MMT Despite being one of the world’s largest oil consumers, India’s emergency reserves remain modest by global standards. According to data cited by The Economic Times, India held around 21 million barrels of strategic crude oil stocks at the end of 2025. In comparison, China held approximately 1.4 billion barrels, the United States maintained 413 million barrels, and Japan had 263 million barrels. Why Is India Expanding Strategic Oil Storage? The recent conflict involving Iran and the resulting volatility in oil markets have once again highlighted India’s dependence on imported energy. India is the world’s third largest energy consumer and imports nearly 88% of its crude oil requirements. Such dependence exposes the economy to geopolitical risks, shipping disruptions, and supply shocks. Any major disturbance in global energy markets can quickly translate into higher fuel prices, inflationary pressures, and increased import bills. To reduce these risks, the government has been steadily expanding emergency crude storage capacity through Indian Strategic Petroleum Reserve Limited (ISPRL), the agency responsible for managing India’s strategic reserves. India’s Oil Supply Routes Remain Vulnerable India’s challenge is not limited to import dependence alone. A large share of the country’s crude oil imports travels through some of the world’s most sensitive maritime chokepoints. The Strait of Hormuz remains the most critical route, historically handling more than 60% of India’s oil imports. The Bab-el-Mandeb Strait and the Malacca Strait are also vital corridors for global energy flows. Any military conflict, shipping attack, or geopolitical disruption affecting these routes can threaten oil supplies and increase transportation costs. Although India has diversified sourcing and now imports a substantial portion of crude from regions outside the Gulf, policymakers continue to view larger strategic reserves as essential protection against future disruptions. Why The ONGC Model Is Different The proposed Mangaluru project marks a significant shift in India’s strategic reserve policy. Until now, strategic petroleum reserves have largely been funded and developed by the government through ISPRL. Under the new model, ONGC will finance and construct the storage facility using its own balance sheet. Since the company already owns the land earmarked for the project, execution could be faster and more efficient. The move also reduces the government’s direct capital burden while enabling the country to expand strategic storage infrastructure. What Is The Next Phase Of India’s SPR Expansion? The government approved the second phase of strategic petroleum reserve expansion in 2021 under a public-private partnership (PPP) framework. The expansion plan includes: Chandikhol, Odisha – 4 MMT Padur, Karnataka – 2.5 MMT The revised framework allows ISPRL to lease a portion of storage capacity to refiners and traders while preserving emergency access rights for the government. This approach improves the commercial viability of storage assets while ensuring they remain available during national emergencies. Why Strategic Reserves Matter More Than Ever Recent geopolitical conflicts have demonstrated how strategic reserves can provide countries with greater flexibility during periods of market turmoil. Large stockpiles allow governments to stabilize domestic markets, reduce dependence on immediate imports, and cushion the impact of supply disruptions. China recently demonstrated the advantages of maintaining extensive reserves by drawing down stockpiles as global crude prices surged. India, however, continues to rely heavily on ongoing imports to meet domestic demand. As global energy markets become increasingly volatile, expanding strategic petroleum reserves is emerging as a critical component of India’s long-term energy security strategy. The proposed ONGC built Mangaluru cavern is expected to play a key role in that effort.