Why in News

With Brent crude near $106/barrel, US-Iran tensions intensifying, and the rupee under depreciation pressure, India’s Strategic Petroleum Reserves (SPR) are again under scrutiny. India’s three operational SPR sites, Vishakhapatnam, Mangalore, and Padur, provide only approximately 10 days of consumption coverage, well short of the IEA’s recommended 90-day reserve standard for member countries.

What is a Strategic Petroleum Reserve?

A Strategic Petroleum Reserve is a government-owned stockpile of crude oil held to manage:

  1. Supply disruptions: geopolitical conflicts, sanctions, infrastructure failures
  2. Price volatility: strategic releases during sustained price spikes
  3. National security: emergency fuel for military and critical sectors
  4. Trade balance management: buffer against external account stress

The concept emerged after the 1973-74 OPEC oil embargo, when the International Energy Agency (IEA) was created (1974) to coordinate energy security among consuming countries.

India’s SPR Architecture

Phase 1 (Operational since 2017-2018)

Site State Capacity Operational Since
Vishakhapatnam Andhra Pradesh 1.33 MMT 2015
Mangalore Karnataka 1.5 MMT 2017
Padur Karnataka (near Udupi) 2.5 MMT 2018
Total Phase 1 5.33 MMT

Phase 2 (Under construction)

Site State Planned Capacity
Chandikhol Odisha 4 MMT
Padur (expansion) Karnataka 2.5 MMT
Total Phase 2 6.5 MMT (planned)

When Phase 2 is operational, India’s SPR capacity will reach approximately 11.83 MMT: roughly 22 days of consumption coverage.

Managing Authority: ISPRL

Indian Strategic Petroleum Reserves Limited (ISPRL): wholly-owned subsidiary of the Oil Industry Development Board (OIDB) under the Ministry of Petroleum and Natural Gas: manages all SPR operations. ISPRL was incorporated in 2004.

ISPRL operates a fill-when-cheap, hold-for-emergency strategy. Procurement is through:

  • Long-term supply agreements
  • Spot market purchases during low-price windows
  • Strategic partnerships (UAE, Saudi Arabia)

SPR Storage Methodology: Underground Caverns

India’s SPR sites use underground rock caverns for storage, a methodologically advanced approach favoured for security and cost.

Feature Detail
Storage type Underground unlined hard rock caverns
Depth Typically 50-200 metres below ground
Advantages Secure from aerial attacks; lower evaporation; cheaper than aboveground tanks
Disadvantages Higher initial construction cost; complex retrieval logistics

The Vishakhapatnam cavern is approximately 50 metres below sea level, a significant engineering achievement.

India’s Energy Security Context

Indicator Value (2025-26)
India’s daily oil consumption ~5 million barrels per day
Daily import ~4.25 million barrels per day
Import dependence ~85%
Annual oil import bill ~$160 billion (FY26)
World’s third-largest oil consumer After China and US
World’s second-largest crude importer After China

India is structurally vulnerable to oil price shocks. Every $10/barrel increase in Brent adds approximately $15-20 billion to the annual import bill.

The IEA Standard: and India’s Gap

Country SPR Coverage
United States ~600 million barrels (~30 days commercial + ~25 days strategic)
Japan ~528 million barrels (~145 days total, public + private)
South Korea ~284 million barrels (~115 days)
China ~600 million barrels (estimated; not publicly disclosed)
India (current SPR) ~5.33 MMT (~10 days)
India (post-Phase 2) ~11.83 MMT (~22 days)

The IEA’s 90-day reserve standard (combining government SPR + commercial inventory + national stocks) is the global benchmark. India is not an IEA member but participates as an “Association” country since 2017. Achieving IEA standard would require approximately 200+ MMT of total reserves, a massive expansion.

Strategic Releases: When SPR is Used

Year Country Release Trigger
1991 US Released 33 mb Gulf War supply disruption
2005 US Released ~30 mb Hurricane Katrina
2011 IEA Coordinated release ~60 mb Libya crisis
2022 US Released ~180 mb Russia-Ukraine; gasoline prices
2022 India Released 5 mb (first ever) Coordinated with US-Japan-UK
2026 (Anticipated) India considering release If Brent crosses $120 sustainably

India’s first SPR release in November 2022 (5 million barrels) was a coordinated response with the US, Japan, and UK during the Russia-Ukraine crisis. It established the operational template for future strategic releases.

Critiques and Reforms

Concern Issue
Coverage is too low 10 days vs IEA’s 90 days; 22 days post-Phase 2
Phase 3 unfunded Concrete plans for further expansion lack budget commitment
Storage vs commercial reserves Question of whether private oil companies should be incentivised to hold larger reserves
Filling decisions When to procure (low prices) vs hold (high prices), strategic timing
Renewable transition If India achieves clean energy targets, SPR’s relevance may diminish

UPSC Relevance

Paper Angle
GS3, Economy Energy security; oil import dependence; CAD; rupee dynamics
GS3, Internal Security Strategic reserves; war preparedness
GS2, IR IEA; OPEC; India’s energy diplomacy; 2022 coordinated release

Mains Keywords: Strategic Petroleum Reserves, ISPRL, OIDB, Vishakhapatnam Mangalore Padur, IEA 90-day standard, oil import dependence, 2022 coordinated SPR release, Chandikhol Phase 2, Brent crude, energy security

Facts Corner

Item Fact
ISPRL incorporated 2004
Phase 1 SPRs Vishakhapatnam, Mangalore, Padur (5.33 MMT)
Phase 2 SPRs Chandikhol (4 MMT), Padur expansion (2.5 MMT)
Total post-Phase 2 ~11.83 MMT (~22 days)
Storage method Underground unlined rock caverns
Owner Government of India (via ISPRL → OIDB → MoPNG)
IEA reserve standard 90 days
India’s IEA status “Association” country since 2017 (not full member)
2022 SPR release 5 million barrels (first ever; coordinated with US-Japan-UK)
Daily consumption ~5 million barrels per day
Import dependence ~85%
World rank, oil consumer 3rd (after China, US)
World rank, crude importer 2nd (after China)

Source: India's Strategic Petroleum Reserves, Vishakhapatnam, Mangalore, Padur, and the IEA Question — Ujiyari.com | Free UPSC & State PCS Current Affairs