SYLLABUS

GS 1: Distribution of Key Natural Resources across the world (including South Asia and the Indian sub-continent);

GS 3: Infrastructure: Energy.

Context: According to a recent statement by the Ministry of Petroleum and Natural Gas (MoPNG), India's Strategic Petroleum Reserves (SPRs) are currently holding about two-thirds of their total storage capacity.

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• The total crude oil storage capacity of India's Strategic Petroleum Reserves (SPRs) is 5.33 million tonnes, and currently, they hold 3.37 million tonnes (64% of the total capacity).

• India's Strategic Petroleum Reserves (SPRs) are located in three underground cavern facilities in Andhra Pradesh and Karnataka.

o At full capacity, the three SPRs cover around 9.5 days of India’s crude oil supplies.

• These SPRs are meant to act as a buffer for short-term supply shocks and have been in focus in view of the raging war in West Asia, which has disrupted energy flows to India. 

What are Strategic Petroleum Reserves (SPRs)? 

• Strategic Petroleum Reserves (SPRs) are large government-held reserves of crude oil created to safeguard against sudden supply disruptions, conflicts, or sharp price fluctuations.

• The concept of dedicated strategic reserves was first mooted in 1973, after the first oil crisis. 

• Western strategic reserves have been tapped during the first Gulf War (1991), after Hurricane Katrina (2005), and in 2022, after global oil prices surged in the wake of Russia’s invasion of Ukraine.

• Countries like the US, China, and Japan maintain massive strategic petroleum reserves.

• The United States holds 727 million barrels in reserves, while China’s capacity exceeds 1,200 million barrels. 

• Current scenario: International Energy Agency (IEA) members recently decided to release 400 million barrels of oil from their emergency reserves in view of the current supply disruption and oil price surge caused by the West Asia war. 

Strategic Petroleum Reserves (SPR) Infrastructure in India

• The Strategic Petroleum Reserves in India are administered by the Indian Strategic Petroleum Reserves Limited (ISPRL), a special purpose vehicle functioning as a wholly owned subsidiary of the Oil Industry Development Board (OIDB) under the Ministry of Petroleum & Natural Gas.

• India’s Storage Facility: At present, the country has established three underground rock cavern storage facilities:

• Visakhapatnam – 1.33 million tonnes
• Mangaluru – 1.50 million tonnes
• Padur – 2.50 million tonnes

• In July 2021, the government sanctioned the development of two additional commercial-cum-strategic reserves with a total capacity of 6.5 million tonnes:

• Chandikhol – 4.0 million tonnes
• Padur (Expansion) – 2.5 million tonnes 

• Additionally, proposals are under consideration for new SPR facilities at Bikaner and Rajkot, which could further augment India’s SPR capacity by approximately 6 million tonnes. 

• Recent Development: Megha Engineering & Infrastructures Ltd (MEIL) secured a bid from Indian Strategic Petroleum Reserves Ltd (ISPRL) to build and operate India’s first private-sector strategic petroleum reserve (SPR) at Padur, Karnataka. 

India's Total Oil and Fuel Reserves

• India is the world’s third-largest consumer of crude oil and depends on imports to meet over 88% of its requirement.

• The IEA recommends that countries should hold oil stocks equivalent to at least 90 days of their net oil imports, but the current total national capacity for storage of crude oil and petroleum products is 74 days, including commercial stocks with refiners, still lower than the recommendations.

Importance of SPRs

• Energy Security & Strategic Buffer: SPRs act as a critical safeguard against supply disruptions caused by geopolitical tensions (e.g., West Asia conflict, Strait of Hormuz risks), ensuring continuity of fuel supply in emergencies. 

• Price Stabilisation & Economic Protection: By enabling controlled release of crude oil during price spikes, SPRs help moderate domestic fuel prices, thereby protecting the economy from inflationary shocks. 

• Meeting Global Energy Security Norms: SPRs contribute towards achieving the International Energy Agency (IEA) benchmark of 90 days of net import cover, strengthening India’s strategic preparedness and credibility. 

• Enhancing Flexibility & Supply Diversification: Larger reserves allow bulk procurement at favourable prices, diversification of import sources, and greater bargaining power, while private participation improves efficiency and reduces fiscal burden. 

SOURCE:
Indian Express