Government Taps ONGC to Build ₹15,000 Crore Strategic Petroleum Reserve at Mangaluru, Karnataka
The government has asked Oil and Natural Gas Corporation (ONGC) to construct India's next strategic petroleum reserve (SPR), marking a shift in how the country develops its emergency crude oil stockpiles. The proposed 1.75 million metric tonne (MMT) underground crude storage cavern at Mangaluru in Karnataka is estimated to cost around ₹15,000 crore.
State-run ONGC, which already owns the land earmarked for the project, is expected to spend nearly ₹5,000 crore on construction, with a further ₹10,000 crore required to fill the facility with crude oil at current prices. If completed, the project would expand India's existing strategic storage capacity of 5.33 MMT by roughly one-third.
This marks the first time a state-owned oil producer has been asked to build a strategic petroleum reserve. India's existing SPR facilities were funded by the government and are operated by Indian Strategic Petroleum Reserve Limited (ISPRL); under the new model, ONGC would finance and construct the asset using its own balance sheet.
India currently operates three SPR facilities with a combined capacity of 5.33 MMT, located at Visakhapatnam in Andhra Pradesh, and Mangaluru and Padur in Karnataka. The country depends on imports for nearly 88% of its crude oil requirements, prompting continued efforts to expand emergency reserves.
The government had earlier approved a second phase of SPR expansion in 2021 through a public-private partnership model, comprising a 4 MMT facility at Chandikhol in Odisha and a 2.5 MMT facility at Padur in Karnataka. Under the revised policy, ISPRL can lease 30% of storage capacity to refiners or traders and use another 20% for trading activities, while retaining emergency access for the government.