The West Asia war and the disruptions to energy supply have stirred urgency around India’s long-delayed push to build strategic petroleum reserves (SPRs). Indian Strategic Petroleum Reserve Ltd (ISPRL) is set to float a tender by the end of April for a 4-million-tonne facility at Chandikhol in Odisha that had been approved five years ago, and advance yet another project at Padur in Karnataka, people aware of the developments said.
While the Chandikhol facility's construction cost is pegged at $1 billion, another $3 billion may be required to fill the reserve, they said.
In another development, Hyderabad-based Megha Engineering and Infrastructures Ltd (MEIL) has got the work order to develop India's first strategic reserve in a public-private partnership (PPP) model for a 2.5-million-tonne crude reserve in Padur.
“There is a plan to ramp up the strategic reserve capacity. A few locations have also been identified. The progress of the projects in pipeline will be accelerated. Land allocation has been done in Chandikhol. The RFP (request for proposal) for the project will be out in a month's time, said one of the two people mentioned above. “Also, the construction of Padur-II project will be done quickly as the work order has been sent and some required financial transactions have also been completed.”
MEIL had won the bid for Padur Phase–II Crude Oil Underground Storage Cavern Project in September 2025. The project includes deployment and operations of 2.5-million-tonne capacity commercial-cum-strategic petroleum reserves, including dedicated single point mooring (SPM) and associated on-shore and off-shore pipelines.
Queries mailed to the ministry of petroleum and natural gas, Indian Strategic Petroleum Reserve and MEIL were unanswered until press time.
India currently has a strategic reserve capacity of 5.3 million tonnes. Prime Minister Narendra Modi informed the Lok Sabha on Monday that India is working on building 6.5 million tonnes of additional crude reserves. The Union cabinet had cleared the 6.5 million tonne capacity, 4 million in Chandikhol and 2.5 million in Padur, in 2021.
Mint had in September 2025 reported that Indian Oil Corp Ltd, Vitol, Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd, HPCL-Mittal Energy Ltd and Larsen & Toubro Ltd had shown initial interest in developing the strategic crude reserve at Chandikhol.
Apart from these two facilities, India also plans to build new SPRs at six locations, as reported earlier by Mint.
The second person cited above said the second phase of the Padur facility is in the "engineering stage". The project will have four storage units, with a 625,000 tonnes capacity each, the person added.
The push to expedite the reservoir projects comes at a time when the country is facing crude supply disruptions due to the ongoing US-Iran war. The blockade of the Strait of Hormuz, through which 20% of global energy shipments move, has put at risk 40% of India's crude supplies.
The government has said the country is comfortable in terms of oil stock and that more is coming in from alternative sources However, price spike is a worry. India imports about 90% of its total oil requirement and a rise of every $1 for a barrel of oil for a year may lead to a ₹16,000-crore increase in the country's annual import bill. This is likely to lead to a host of macroeconomic implications on the external sector front as well as inflation and growth.
Costly delay?
Experts said although strategic reserves are important for energy security, India needs a much accelerated development of reserves.
H.P.S. Ahuja, former managing director and chief executive officer at the Indian Strategic Petroleum Reserves, said: “Strategic reserves are the need of the hour to ensure energy security. Having both commercial and strategic reserves help the country. The PPP mode was introduced to enhance investments and fastrack the process," he said, indicating that these are not quick solutions. "However, these projects will take about 5-7 years for completion."
Kirit Parikh, former member (energy) at the erstwhile Planning Commission of India, is of the view that given their long-gestation nature, these projects should have been accelerated much earlier.
“Strategic reserves are obviously required during exigencies like the current war situation and the global impact. The capacities should have been increased earlier,” Parikh said. "Now, when the prices are high, government should look at other immediate measures such as diversification of imports from more countries. Strategic reserves need to be looked at when global oil prices are low."
The government had on Monday informed Parliament that of the total capacity of 5.33 million tonnes of strategic crude oil reserves at three locations in Andhra Pradesh and Karnataka, about 3.37 million tonnes is currently available that can act as buffer for short-term supply shocks. This is about 64 % of the total storage capacity.
Parliament's standing committee on petroleum and natural gas had in its report, submitted earlier this month, raised concerns over the lack of budgetary allocation for the operations and maintenance of ISPRL.
It noted a "sharp decline" in the budget estimate for ISPRL's operations & maintenance expenditure of ₹220.04 crore to a revised estimate and actual spending of ₹100 crore each in FY25.