India taps ONGC to accelerate SPR expansion amid global oil supply disruption

India has asked state-owned Oil and Natural Gas Corporation to construct a new strategic petroleum reserve facility in Karnataka state, a move that will help to accelerate the expansion of petroleum storage amid global supply disruptions and rising domestic demand, a senior ONGC official and the former CEO of Indian Strategic Petroleum Reserves Ltd. (ISPRL) said June 22.

The new facility in Mangalore, with a crude oil storage capacity of 1.75 million metric tons, will be in addition to the second phase of expansion pursued by ISPRL and will be built at a cost of $1.6 billion, the officials told Platts, part of S&P Global Energy.

"This is a government directive. Given all that is happening in the global markets, India is keen to speed up SPR expansion. ONGC is well-positioned to do this, but now we are studying all aspects of it," the ONGC official said.

India's SPRs currently provide coverage of about 9.5 days of net oil imports, while state-run oil companies hold crude oil and petroleum product storage equivalent to 64.5 days of net imports. This brings the country's total national storage capacity for crude and petroleum products to roughly 74 days of net imports, according to the petroleum ministry data.

That falls short of the 90-day minimum required for International Energy Agency member countries. India joined the IEA as an associate member in 2017, and in 2024, ministers from member countries of the IEA pledged to begin discussions on India's full membership, underscoring the South Asian nation's strategic importance in addressing global energy and climate challenges.

"The SPR expansion is a welcome and necessary step and the recognition that energy security risks are becoming structural. However, storage alone doesn't deliver energy security. The real advantage comes from turning reserves into a broader strategy of diversification, trading, and logistics, resulting in greater supply flexibility, market access, and resilience during disruptions," said Premasish Das, executive director for oil analytics at S&P Global Energy CERA.

Storage expansion

In its first phase, India established SPRs at three locations with a combined capacity of 5.33 million mt: 1.33 million mt at Visakhapatnam, 1.5 million mt at Mangalore and 2.5 million mt at Padur in Karnataka. In the second phase, ISPRL plans to further expand capacity by adding another 6.5 million mt of SPRs at two sites: 4 million mt at Chandikhol in the eastern state of Odisha and 2.5 million mt at Padur.

"ISPRL had already identified the land for the second phase of the Mangalore project. ONGC will now take up construction of the project, which will help to expand our petroleum storage capacity much faster," H.P.S. Ahuja, former CEO of ISPRL, told Platts.

The government directive to ONGC comes as New Delhi seeks both domestic and international partners to invest in India's strategic reserves, the officials said.

Under a deal announced May 15, Abu Dhabi National Oil Co. said it aims to boost its crude holdings in India's SPRs to up to 30 million barrels, as New Delhi seeks to bolster its energy security amid wars in the Middle East and Russia and growing domestic demand.

"The announcement by ADNOC to boost SPR holdings in India is a welcome step at a time when India is looking out for partners to ensure energy security," Ahuja said.

Before the US-Iran conflict started, around 52% of India's roughly 5 million b/d of crude imports passed through the Strait of Hormuz, with Iraq, Saudi Arabia, the UAE, Kuwait and Qatar as its key Middle Eastern suppliers, based on data from S&P Global Commodities at Sea.