Latest federal initiatives target 15 million tonne capacity by 2035 as energy security concerns intensify following sanctions on Russian suppliers and Middle East volatility, Maruthi Prasad Kavuri analyses.
India has embarked on an aggressive acceleration of its Strategic Petroleum Reserve (SPR) expansion, driven by cascading geopolitical shocks including U.S. sanctions on Russian energy suppliers, escalating tensions in the Middle East, and deepening supply-chain vulnerabilities. In what represents a fundamental recalibration of the nation’s energy resilience strategy, the Ministry of Petroleum and Natural Gas has fast-tracked capacity augmentation plans that, if executed successfully, will triple crude storage from 5.33 million metric tonnes (MMT) to approximately 15 MMT by 2035—moving India closer to international standards for emergency reserves.
The urgency of this initiative crystallized in November 2025 when the United States imposed combined duties of 50 percent on India’s Russian crude oil imports—a 25 percent reciprocal tariff layered atop an additional 25 percent penalty specifically targeting Russian oil. Simultaneous sanctions against Rosneft and Lukoil, effective November 21, 2025, have compelled Indian refineries to fundamentally restructure their procurement strategies. The financial impact is acute: analysts project an additional $6 billion to $7 billion in annual oil import expenditure, while Brent crude prices spiked an immediate 8 percent on markets. Yet the trade-war calculus extends beyond economics. Faced with the threat of secondary sanctions on refinery operations, India has paradoxically increased U.S. crude purchases—which surged to 10.7 percent of imports by October 2025, compared to merely 3 percent in 2024, marking the highest import volumes since March 2021.
This reconfiguration of India’s energy sourcing—coupled with preexisting vulnerabilities centered on the Strait of Hormuz and Iran-Israel tensions—has triggered what L.R. Jain, Chief Executive Officer and Managing Director of Indian Strategic Petroleum Reserves Limited (ISPRL), describes as a “crucial decade” for energy self-sufficiency. “Given all that we are seeing in the world in terms of geopolitics, conflicts, trade policies and oil flows, the best way to minimize the impact of these developments is by holding much larger volumes of oil at home,” Jain told S&P Global Energy in September 2025.
A 9.5-Day Buffer Against 85% Import Dependence
India’s existing crude oil storage network, completed under Phase-1, consists of three underground rock cavern facilities strategically positioned across the peninsula. The Visakhapatnam cavern in Andhra Pradesh holds 1.33 MMT; Mangalore in Karnataka stores 1.5 MMT; and the Padur facility in Karnataka maintains 2.5 MMT, for a combined capacity of 5.33 MMT. This aggregate reserve translates to merely 9.5 days of the nation’s crude oil requirement—a critical shortfall when measured against the International Energy Agency (IEA) standard of 90 days of net imports that all developed economies are required to maintain.
The gap widens considerably when accounting for geopolitical exposure. India imports approximately 85 percent of its crude oil, consuming roughly 5.5 million barrels per day. Of this critical import stream, over 50 percent traverses the Strait of Hormuz, a chokepoint where more than 20 percent of all global oil shipments pass daily. The concentration risk materialized acutely in June 2025 when Iran’s Parliament approved plans to potentially close the Strait following U.S. airstrikes on Iranian nuclear facilities. Should such closure occur—even temporarily—India’s access to over 35 percent of its crude supply and 42 percent of its liquefied natural gas imports would face immediate jeopardy. Energy analysts project that a sustained Hormuz disruption could elevate Brent crude beyond $80-$85 per barrel, triggering cascading effects throughout India’s refining, transportation, and consumer fuel sectors.
“We are dependent on imported oil for the bulk of our needs,” Jain acknowledged during an exclusive interview at India Energy Week 2025. “With India seen as a key center for oil demand growth, the key would be to have a large SPR capacity.”
Phase-2 Expansion
The Ministry of Petroleum’s Year-End Review (December 25, 2025) formally prioritized SPR Phase-2 expansion as a central pillar of energy security policy. Under this phase, ISPRL is constructing two additional storage facilities on a public-private partnership (PPP) basis using the DBFOT (Design, Build, Finance, Operate, Transfer) model, estimated at a capital expenditure of approximately Rs. 15,000 crores with a completion timeline of 5 to 6 years.
The first facility targets Chandikhol in Odisha with a 4 MMT capacity; the second will expand the Padur complex in Karnataka by an additional 2.5 MMT, together adding 6.5 MMT to India’s strategic inventory. Jain reported in September 2025 that land acquisition efforts remain on schedule: “The land acquisition work for most of the projects in the second phase is going as per plan. ISPRL has already received possession of land at Padur, while land at Chandikhol is expected to be acquired shortly.”
The PPP framework has been deliberately engineered to attract both domestic and international capital. The Indian government has signaled willingness to provide subsidies of up to 60 percent of construction costs, fundamentally de-risking the commercial model. International investors are responding to these inducements. Abu Dhabi National Oil Company (ADNOC), the only overseas producer currently storing crude in Indian caverns, has already committed 5.86 million barrels at the Mangalore facility since 2017—and has signed a memorandum of understanding to expand this footprint. ADNOC’s participation is particularly significant because India has granted the UAE company permission to re-export crude from the caverns to third markets, aligning Indian policy with precedents established by Japan and South Korea and positioning India as a credible regional energy hub.
Phase-3
Beyond Phase-2, ISPRL has initiated feasibility studies for six additional SPR sites that, if developed, would add approximately 9 MMT of capacity—substantially advancing the organization’s stated ambition to reach 15 MMT by 2035. These planned locations represent a geographic and technological diversification strategy:
Bikaner, Rajasthan — A salt cavern facility targeting 5 MMT capacity stands at the forefront of this expansion. What distinguishes Bikaner, however, is ISPRL’s explicit exploration of storing natural gas and, eventually, green hydrogen. “Since Rajasthan is full of potential for solar power generation, we can make Green Hydrogen from solar,” Jain explained in February 2025. “Hydrogen could be the next step.” The salt cavern technology offers a fundamentally different engineering profile compared to the unlined rock caverns used at Visakhapatnam, Mangalore, and Padur—potentially enabling faster construction cycles and economic advantages in saline-rich geologies.
Mangalore Special Economic Zone, Karnataka — A 1.5 MMT capacity addition near existing refinery and port infrastructure, selected for logistical efficiency.
Bina, Madhya Pradesh — Rock cavern facilities of 1-1.5 MMT capacity, with feasibility studies ongoing.
Four Additional Coastal and Refinery-Proximate Sites — Engineers India Limited (EIL) is conducting detailed feasibility reports expected by year-end 2025, targeting locations near major coastlines and petrochemical complexes to optimize transportation and operational integration.
The Engineering Foundation: Unlined Rock Caverns and Global Precedent
The technical architecture underlying India’s SPR network derives from Norwegian hydropower engineering traditions, specifically the unlined rock cavern methodology that has proven its durability across multiple decades and geographies. Unlike lined caverns requiring steel membranes or synthetic containment, unlined rock caverns leverage hydrostatic groundwater pressure to maintain structural integrity and product containment—a approach that eliminates long-term degradation risks inherent in synthetic linings and reduces lifecycle operational costs.
At Visakhapatnam, the primary storage units consist of W-shaped and U-shaped cavern complexes with cross-sectional dimensions of 20 meters by 30 meters, extending lengths between 320 to 840 meters. The deepest points reach approximately 100 meters below sea level, though earlier journalistic accounts (notably viral videos) significantly exaggerated these depths to 162-196 meters, claiming an impossible 7.5-kilometer tunnel system—claims thoroughly debunked by engineering documentation. The Visakhapatnam cavern, commissioned operationally in the early 2010s, has logged zero operational losses and zero leakage incidents across its operational tenure.
Immediately adjacent to the crude oil storage complex at Visakhapatnam sits Asia’s first underground liquefied petroleum gas (LPG) cavern, operated by South Asia LPG—a joint venture between Hindustan Petroleum Corporation Limited (HPCL) and a French partner. This facility maintains a 60,000 metric tonne capacity with its deepest point reaching 196 meters below sea level. Commissioned in December 2007, the LPG cavern has operated for 15 consecutive years without major incident, accumulating over 4.48 million accident-free work hours.
The 50-30-20 Commercial Model
Recognizing that perpetually government-funded storage alone cannot finance rapid expansion, New Delhi has implemented a revenue-generating policy framework that permits ISPRL to commercialize a portion of its capacity while maintaining sovereign control over emergency reserves. The policy matrix divides cavern utilization as follows: 50 percent reserved exclusively for strategic government use; 30 percent available for commercial lease to petroleum corporations and energy traders; and 20 percent dedicated to oil trading operations—all subject to the fundamental caveat that government retains first-right access to the entire stored volume in any declared emergency.
This architecture has already yielded agreements. ISPRL signed a lease agreement with Mangalore Refinery and Petrochemicals Limited (MRPL) in January 2025 for commercial storage capacity. HPCL secured 300 tonne capacity in the Visakhapatnam cavern under similar commercial terms. “ISPRL is expected to cover its operational expenses from such commercialisation activities, and at the same time, the interest of the government is protected by way of having first right on crude available in the caverns,” Jain explained. This approach simultaneously advances fiscal sustainability and market pragmatism.
Global Comparative Context& the IEA Benchmark Gap
India’s SPR expansion must be contextualized against international energy security norms and geopolitical peer performance. The IEA, which oversees emergency oil reserves among its 31 member states, mandates minimum stockpile levels equivalent to 90 days of net imports. India, though not an IEA member, has adopted this benchmark as policy guidance. Currently, India’s SPR coverage of 9.5 days falls dramatically short. Even when aggregating strategic reserves with crude and petroleum product stocks held by state-controlled refiners—a combined inventory of approximately 77 days—India remains 13 days below the IEA standard.
Regionally, Japan maintains approximately 75 days of SPR coverage, while South Korea manages approximately 60 days. India’s trajectory toward 25-27 days of SPR-exclusive coverage (achieved through the 15 MMT target) would still leave reliance on refiner reserves and strategic policy instruments to bridge the IEA-mandated gap. However, advocates argue that India’s geographic and economic peculiarities—particularly the concentration of import routes through the Strait of Hormuz and its status as the world’s third-largest crude consumer—justify a proportionally larger strategic buffer than many developed economies.
ADNOC’s Re-export Precedent
A policy innovation with underestimated significance emerged from India’s recalibration of SPR usage rules in late 2023 and early 2024. Responding to ADNOC’s pandemic-era request to re-export crude stored in Indian caverns for profit optimization, New Delhi granted permission to allow overseas producers to withdraw and commercially export crude from SPR facilities—a departure from historical practice. This policy now positions Indian caverns as regional oil trading hubs, analogous to strategic reserve systems in Japan and South Korea that similarly permit international producer participation and re-export.
ADNOC has thus far refrained from exercising its re-export permissions, according to Jain; however, the precedent unlocks commercial revenue streams and attracts additional international partnerships. Multiple negotiation channels are reportedly active with other Middle Eastern producers seeking Indian cavern access.
Energy Security Amid Diverging Sourcing Realities
The structural complexity of India’s current energy vulnerability transcends simple supply-and-demand calculations. In June 2025, Russian crude imports reached 2.2 million barrels per day—exceeding the combined inflows from all Middle Eastern suppliers. This paradoxical situation—where sanctions nominally intended to deprive Russia of revenue have pushed India toward offsetting supplies from the United States, Saudi Arabia, and Iraq—underscores how tariff regimes and sanctions architectures interact with geopolitical alignment and economic interest.
India’s reliance on Russian oil, historically justified by steep discounts available to New Delhi’s refineries, has become politically fraught. The EU’s October 2025 compliance guidelines imposed an import ban on refined petroleum products derived from Russian crude, effective January 2026—potentially impacting India’s substantial petroleum product exports to European markets, which have grown substantially since 2018. This secondary sanctions risk compounds the primary tariff burden and incentivizes accelerated supply diversification.
Connecting SPR Expansion to Broader Energy Transition
Significantly, ISPRL’s SPR expansion roadmap does not exist in isolation from India’s broader decarbonization commitments. The Ministry of Petroleum and Natural Gas Year-End Review (December 2025) positioned SPR expansion alongside parallel initiatives including green hydrogen integration into city gas distribution networks, E20 ethanol-blending mandates targeting 20 percent by 2025-26, and establishment of “Hydrogen Valleys” near industrial clusters. The Rajasthan salt cavern facility proposed for Bikaner—capable of storing both natural gas and, prospectively, green hydrogen—exemplifies this strategic convergence, positioning SPR infrastructure as foundational to a diversified, lower-carbon energy portfolio rather than an anachronistic petrochemical holdover.
Jain’s vision, articulated across multiple 2025 interviews, frames ISPRL not merely as a petroleum reserve operator but as a multi-commodity energy storage platform. “We are also doing some feasibility studies for strategic gas reserves,” he stated, directly connecting gas reserve development to hydrogen as “the next step.”
Strategic Imperative and Timeline Realities
India’s aggressive SPR expansion represents a rational response to demonstrated vulnerabilities and foreseeable geopolitical risks. The combination of U.S. trade pressures on Russian supplies, Iranian threats to the Strait of Hormuz, and the broader deglobalization of energy trade has rendered a 9.5-day strategic reserve operationally insufficient. The government’s commitment to tripling capacity by 2035—advancing from 5.33 MMT to 15 MMT—represents an intellectual acknowledgment that India’s role as the world’s third-largest oil consumer and fastest-growing demand center justifies reserve depths comparable to or exceeding developed economies.
The Phase-2 expansion, currently underway with land acquisition largely secured and PPP frameworks finalized, will deliver 6.5 MMT over the next five to six years. Phase-3 feasibility studies, whose detailed reports are expected by year-end 2025, will determine whether the ambitious 15 MMT vision achieves realization. The political and financial commitment required to execute this agenda is substantial—estimated at Rs. 15,000 crores for Phase-2 alone, with Phase-3 costs yet to be quantified.
Yet the strategic arithmetic is equally compelling. Every additional MMT of crude storage capacity extends India’s emergency buffer by approximately 1.5 to 2 days—marginal gains that, cumulatively, represent the difference between national energy resilience and vulnerability to the next geopolitical disruption. As Middle East tensions persist, U.S. policy volatility continues, and Great Power competition for energy resources intensifies, India’s Strategic Petroleum Reserve network has evolved from a peripheral policy discussion into a central pillar of national security architecture.
