One-third of India’s Strategic Petroleum Reserves Empty: Implications for Energy Security

Relevance: GS Paper III – Economy – Energy Security, Infrastructure

Important Keywords for Prelims and Mains

For Prelims:

Strategic Petroleum Reserves (SPR), ISPRL, Underground Caverns, Crude Oil Imports, IEA Norms, Strait of Hormuz, ADNOC

For Mains:

Energy Security, Supply Shock Buffer, Import Dependence, Strategic Storage, Geopolitical Risk, Oil Market Stabilisation, Energy Diplomacy

Why in News?

India’s Strategic Petroleum Reserves (SPR) are currently only about 64% filled, with 3.37 million tonnes stored out of 5.33 million tonnes capacity, raising concerns amid West Asia conflict and disruptions in global oil supply chains.

What are Strategic Petroleum Reserves (SPR)?

The concept of dedicated strategic reserves was first mooted in 1973, after the first oil crisis
Government-maintained emergency crude oil stockpiles
Designed to act as a buffer against short-term supply disruptions

Global Usage Examples

Gulf War (1991)
Hurricane Katrina (2005)
Russia–Ukraine conflict (2022)

Used to stabilise markets and ensure supply continuity

Status of India’s SPR

Capacity and Current Storage

Total capacity: 5.33 million tonnes (MMT)
Current stock: 3.37 MMT (~64%)
SPR levels are dynamic, depending on consumption and market conditions

Coverage

At full capacity → ~9.5 days of crude oil requirement

Locations of SPR

Location	Capacity
Visakhapatnam, Andhra Pradesh	1.33 MMT
Mangalore, Karnataka	1.5 MMT
Padur, Karnataka	2.5 MMT

Stored in underground rock caverns
Managed by Indian Strategic Petroleum Reserve Limited (ISPRL)

Petroleum and Natural Gas Regulatory Board (PNGRB)

Statutory Status:
PNGRB is a statutory regulatory body established under the Petroleum and Natural Gas Regulatory Board Act, 2006.
Nature of Functions:
The Board performs quasi-judicial functions and operates in a manner similar to a tribunal, with powers equivalent to those of a Civil Court.
Objectives:
- Safeguard the interests of consumers
- Regulate activities in the petroleum and natural gas sector (excluding crude oil exploration and production)
- Promote fair competition among entities
- Ensure adequate and uninterrupted supply of petroleum and natural gas across the country
Regulatory Scope:
The Board oversees operations related to:
- Refining
- Storage
- Transportation (including pipelines)
- Distribution
- Marketing of petroleum and natural gas
Dispute Resolution Role:
- Adjudicates disputes between entities or individuals involved in petroleum and gas activities
- Handles complaints related to:
  - Retail service obligations
  - Display of prices
  - Pipeline access and tariff issues
  - City Gas Distribution (CGD) networks
- Can issue orders, directions, or refer matters for further investigation
Appeal Mechanism:
Appeals against PNGRB decisions lie with the Appellate Tribunal for Electricity (APTEL), established under the Electricity Act, 2003. Top of FormBottom of Form

India’s Overall Oil Stock Position

Current Total National capacity for storage of crude oil and petroleum products (including commercial stocks): ~74 days (it is still lower than what the IEA recommends)
Government estimate: enough for ~8 weeks (~56 days) during crisis
Still below IEA recommended 90 days

Global Context and IEA Norms

IEA recommends minimum 90 days of net import coverage
IEA recently released 400 million barrels globally due to crisis
Countries like USA, China, Japan maintain large reserves

India is not a full member of the grouping but an associate member

Geopolitical Dimension: Strait of Hormuz

Around 2.5–2.7 million barrels/day (≈50% of imports) pass through Strait
Long-term average: ~40%
Current West Asia conflict has disrupted this key chokepoint

Highlights India’s high vulnerability to external shocks

Expansion Plans and Policy Status

In July 2021, the government had approved the establishment of two more commercial-cum-strategic petroleum reserves

Chandikhol (Odisha): 4 MMT
Padur expansion: 2.5 MMT

Proposed but Pending

Bikaner
Rajkot

Additional ~6 MMT capacity planned but not finalised

Commercial Dimension of SPR

SPRs also serve economic and strategic purposes

Key Features

Ability to release oil during price spikes
Refill during low-price cycles

Leasing Model

Example:
- UAE’s ADNOC allowed to store 750,000 tonnes in Mangaluru SPR

Benefits

Reduces freight cost for exporters
Enhances India’s role in global oil markets
Provides strategic leverage

Key Concerns

1. Low Reserve Levels

Only 64% capacity filled

2. Limited Coverage

SPR alone covers <10 days of demand

3. High Import Dependence

India imports >88% of crude oil

4. Delayed Infrastructure Expansion

Phase-II and additional projects not yet implemented

5. Geopolitical Risks

Heavy reliance on West Asia and Hormuz route

6. Below Global Standards

Total reserves below IEA benchmark (90 days)

Way Forward

Accelerate SPR expansion projects (Phase-II and new sites)
Increase reserve capacity towards 90-day benchmark
Diversify crude import sources (Russia, Africa, Americas)
Strengthen energy diplomacy and supply agreements
Integrate SPR with commercial storage and trading strategy
Promote renewable energy transition to reduce dependence

Conclusion

India’s partially filled Strategic Petroleum Reserves highlight structural weaknesses in its energy security framework. In an era of increasing geopolitical instability, strengthening SPR capacity is essential to ensure energy resilience, economic stability, and strategic autonomy.

UPSC PYQ

Q. Consider the following activities: (UPSC/2025)

I. Production of crude oil
II. Refining, storage and distribution of petroleum
III. Marketing and sale of petroleum products
IV. Production of natural gas

How many of the above activities are regulated by the Petroleum and Natural Gas Regulatory Board in our country?

a) Only one
b) Only two
c) Only three
d) All the four

Answer: b)

Explanation

The Petroleum and Natural Gas Regulatory Board (PNGRB) regulates downstream activities in the petroleum and natural gas sector.

Statement-wise analysis:

I. Production of crude oil (Incorrect)
- Not regulated by PNGRB
- Falls under upstream sector (handled by Ministry of Petroleum & Natural Gas / other agencies)
II. Refining, storage and distribution of petroleum (Correct)
- These are downstream activities
- Clearly regulated by PNGRB
III. Marketing and sale of petroleum products (Correct)
- PNGRB regulates these activities
IV. Production of natural gas (Incorrect)
- Also, an upstream activity
- Explicitly excluded from PNGRB’s mandate

CARE MCQ

Q. With reference to Strategic Petroleum Reserves (SPR) in India, consider the following statements:

I. India’s SPRs currently provide more than 30 days of crude oil supply coverage.
II. SPRs are designed to protect against short-term disruptions in oil supply.
III. India meets more than 80% of its crude oil requirement through imports.

How many of the above statements are correct?

(a) Only one
(b) Only two
(c) All three
(d) None

Answer: (b)

Explanation

Statement I – Incorrect:
India’s SPRs cover only about 9.5 days of crude oil requirement, not 30 days.
Statement II – Correct:
SPRs act as a buffer against short-term supply shocks.
Statement III – Correct:
India imports over 88% of its crude oil requirement.

Additional Information