India should go aggressive in ramping petroleum reserve capacity: SM Vaidya

India’s current capacity for storage of crude oil and petroleum products needs to be ramped up by going aggressive on building Strategic Petroleum Reserves (SPR) capacity, said SM Vaidya, Former Chairman of Indian Oil Corporation Ltd.

“This crisis is the signal to go aggressively on building SPR capacity. Taking the reserve up to the order of 100 million barrels would itself give us close to 20 days of strategic cover at current throughputs,” he said. SPRs are built underground in rock and salt caverns near ports and refineries for easy access.

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Vaidya, who retired as IOCL Chairman in August 2024, opined that India cannot keep treating Hormuz as a theoretical risk and this episode shows why the country needs to lock in much larger underground storage while we still have the time and fiscal space to do it.

“In energy security, one simple rule applies: what has happened once will happen again. Our systems must be built on that assumption,” he adds.

The government has said that India currently has a total capacity for storage of crude oil and petroleum products for 74 days, which can help to tide over disruptions in case of adverse situations.

Minister of State for Petroleum and Natural Gas Suresh Gopi told the Rajya Sabha in a written reply on Monday that the government has established Strategic Petroleum Reserves facilities with a total capacity of 5.33 million metric tonnes (MMT), which can act as a buffer for short-term supply shocks such as geopolitical conflicts.

“This is meant to provide for about 9.5 days of crude oil requirement. In addition, Oil Marketing Companies (OMCs) in the country have storage facilities for crude oil and petroleum products for 64.5 days. Hence, the current total national capacity for storage of crude oil and petroleum products is 74 days," he said.

To further augment the SPR capacity, the Government, in July 2021, had also approved the establishment of two additional commercial-cum-strategic petroleum reserve facilities with total storage capacity of 6.5 MMT at Chandikhol (4 MMT) in Odisha and Padur (2.5 MMT) in Karnataka, on a Public Private Partnership mode. 

India is doubling down on its efforts to build new SPRs at six proposed locations. These include a new reserve at the Mangalore Special Economic Zone in Karnataka and another at salt caverns in Rajasthan's Bikaner.