India Plans Oil Reserve Expansion After Iran-US War: How Much Will the New Mangaluru Strategic Oil Buffer Add?
India's decision to ask state-run Oil and Natural Gas Corporation (ONGC) to build a new strategic petroleum reserve (SPR) at Mangaluru marks one of the country's biggest energy security initiatives in recent years. The move comes in the wake of supply concerns triggered by the Iran conflict and fears of disruptions in the Strait of Hormuz, through which a significant portion of India's crude imports pass.
The proposed project is estimated to cost around ₹15,000 crore and would significantly boost India's emergency crude storage capacity. Unlike previous projects, ONGC is expected to both build and fill the reserve.
AI-generated summary, reviewed by editors
Why Is India Building Another Strategic Oil Reserve?
India imports more than 80% of its crude oil requirements, making it highly vulnerable to geopolitical disruptions, wars, sanctions, shipping bottlenecks and sudden price spikes.
The Russia-Ukraine war, Red Sea disruptions and the recent Iran crisis have highlighted the risks of depending heavily on imported crude.
Strategic petroleum reserves act as an insurance policy. In an emergency, the government can release oil from these reserves to:
- Maintain fuel supplies
- Prevent panic buying
- Stabilise prices
- Support refineries during import disruptions
- Strengthen national energy security
India's Current Strategic Petroleum Reserves
India's existing SPR network is managed by Indian Strategic Petroleum Reserves Limited.
| Location | Capacity (MMT) |
|---|---|
| Visakhapatnam | 1.33 |
| Mangaluru | 1.50 |
| Padur | 2.50 |
| Total | 5.33 MMT |
Current Stock Position
The Petroleum Ministry recently informed Parliament that India currently holds about 3.37 million metric tonnes of crude oil in these caverns, equivalent to roughly 64% of total capacity.
At full capacity, India's current SPR system can cover approximately 9.5 days of crude oil demand.
Government Stocks vs OMC Stocks
Many people confuse strategic reserves with oil company inventories.
1. Strategic Petroleum Reserves (Government Stocks)
Owned by the government through ISPRL
Used only during emergencies
Stored in underground rock caverns
Current capacity: 5.33 MMT
2. Commercial Stocks (OMCs and Refineries)
Maintained by:
- Indian Oil Corporation
- Bharat Petroleum Corporation Limited
- Hindustan Petroleum Corporation Limited
- Private refiners such as Reliance Industries and Nayara Energy
These stocks are used for day-to-day refining and fuel distribution.
India's total oil availability, including SPRs, refinery inventories and oil in transit, is estimated to cover around 75 days of demand.
How Much Will the New Mangaluru Reserve Add?
While the final storage size has not been officially disclosed, earlier feasibility studies considered a Mangaluru expansion of around 1.75 million tonnes.If a reserve of similar size is built:
| Category | Capacity (MMT) |
|---|---|
| Existing SPR | 5.33 |
| New Mangaluru Reserve | ~1.75 |
| Total | ~7.08 |
This could increase India's emergency coverage by several additional days.
Future Expansion Plans
India has already approved Phase-II strategic reserves:
| Project | Capacity (MMT) |
|---|---|
| Chandikhol, Odisha | 4.0 |
| Padur Expansion | 2.5 |
| Total Additional Capacity | 6.5 |
Once completed, India's SPR capacity would rise from 5.33 MMT to 11.83 MMT.
The government is also evaluating additional reserves in:
- Bikaner
- Bina
- Expanded Mangaluru facilities
How Does India Compare With Major Countries?
Strategic Oil Reserve Comparison
| Country | Approximate Strategic Reserve |
|---|---|
| United States | 340 million barrels |
| China | 500+ million barrels (estimated) |
| Japan | 500+ million barrels |
| South Korea | 200+ million barrels |
| India | 39 million barrels |
India's current SPR capacity of 5.33 MMT equals roughly 39 million barrels, far below the reserves maintained by the US, China, Japan and South Korea.
Why This Matters
The Iran conflict exposed India's biggest vulnerability: dependence on imported crude shipped through geopolitically sensitive routes.
The proposed ONGC-built Mangaluru reserve will:
- Increase emergency crude availability
- Reduce vulnerability to Hormuz disruptions
- Provide a buffer against oil price spikes
- Strengthen India's bargaining power in global crude markets
- Move India closer to the International Energy Agency's benchmark of 90 days of oil cover
India currently has around 75 days of total oil cover (commercial stocks, SPRs and oil in transit combined). The long-term goal is to reach the 90-day threshold maintained by leading energy-importing nations.
Key Takeaway
The ₹15,000-crore Mangaluru project is not merely an oil storage facility. It is a strategic hedge against future wars, sanctions, shipping disruptions and energy shocks. For a country that imports more than four-fifths of its crude requirements, every additional barrel stored underground strengthens national energy security and economic resilience.
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