India’s petroleum reserves have come under scrutiny since the outbreak of the West Asia war, with concerns intensifying as government data showed India’s current capacity in strategic reserves can only cover roughly five-six days of total consumption.
Now, this is not as alarming as it seems, as India’s overall capacity is much higher. However, the current crisis has put a spotlight on India’s limited ability in the face of severe shocks to oil, gas and petroleum product supply.
India currently has three strategic petroleum reserves (SPRs)—buried in underground caverns—in Visakhapatnam, Mangaluru, and Padur. These together have a storage capacity of 5.33 million tonnes. As per Mint calculations, this can cover around 9 days of average daily consumption of 0.6 million tonnes of petroleum products in the country seen over the past five years. With 1.3 and 1.5 million tonnes of capacity, Visakhapatnam and Mangaluru can cover about 2.2 days and 2.5 days of demand, respectively, while Padur 2.5 million tonnes can cover about 4.2 days of demand. However, these reserves are only 64% full (about 3.37 million tonnes), forming the basis for the widely cited estimate of six days of coverage.
The widely reported six days or nine days of petroleum cover is true, but it is limited to just strategic reserves. The government on Thursday clarified that the actual stock capacity is 74 days, which includes 64.5 days worth of storage facilities for crude oil and petroleum products held by oil marketing companies (OMCs). There is a little caveat here as well: the actual stock cover is around 60 days currently, since these reserves are not operating at full capacity.
Even as the government has assured that “India is completely secure for the next many months”, reports of long queues for liquefied petroleum gas (LPG) do reflect supply disruption pains. India's import dependence on crude oil is 85-88%, and on liquefied natural gas (LNG) 48-50%.
While India is unlikely to run out of oil and gas anytime soon, as the government is also tapping alternative sources to offset losses from West Asia, the fact that strategic oil capacity is more than one-third empty is not good planning, especially given the country's high import dependence. This reflects in the budget numbers.
The budgetary allocations and spending on strategic oil reserves have been underwhelming. Even with high budgetary allocations earlier, actual spending was only a fraction of the amount. This was then followed by smaller allocation itself.
Between FY20 and FY26, the spending undershot the budgetary allocation by a huge margin in four years. In FY24 and FY26 (the current year), actual spending was just 2.7% and 17.7%, respectively of the Budget estimates. For FY27, the allocation at ₹200 crore is the lowest at least since FY20.
In July 2021, the government approved the establishment of two additional commercial-cum-strategic petroleum reserve facilities with storage capacity of 4 million tonnes at Chandikhol and 2.5 million tonnes in Padur on a public-private partnership mode.
More than five years later, these projects are still at the initial stage. Mint reported on Thursday that the Indian Strategic Petroleum Reserves Ltd (ISPRL) is set to float a global tender by the end of April to finally build the facility at Chandikhol and fast-track the project at Padur, as West Asia war tested India’s dependence. Even if these two facilities are built, they will add another 11-12 days of demand cover.
With low strategic reserves, and even 70+ days' worth of total stock capacity, India’s preparedness pales compared to other countries that are highly dependent on imports.
Japan, which has over 90% import dependence on energy, holds reserves of around 254 days, while China’s stockpiles can cover 110-140 days of imports.
The International Energy Agency (IEA) recommends that its member countries maintain reserves covering 90 days of net oil imports. The current situation serves as a stark reminder that India cannot rely solely on imports—strengthening domestic production and maintaining adequate reserves are crucial amid rising global uncertainty.