From Iran shock to oil security: ONGC’s Rs 15,000 crore plan to boost India’s crude reserves

India is preparing to strengthen its energy security shield after recent geopolitical disruptions exposed the country’s limited emergency crude oil reserves. State-run Oil and Natural Gas Corporation (ONGC) is planning to build and fill a new strategic petroleum reserve (SPR) facility in Mangaluru, a project that could require an investment of around ₹15,000 crore ($1.6 billion), according to a report by The Economic Times.

The move comes after the Iran war highlighted India’s vulnerability to global crude supply disruptions and price shocks, prompting the government to push for faster expansion of emergency oil storage infrastructure.

The proposed underground cavern facility in Mangaluru will have a capacity of around 1.75 million metric tonnes (MMT), increasing India’s existing strategic crude storage capacity of 5.33 MMT by nearly one-third.

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According to the report, ONGC already owns the land for the project and may spend about ₹5,000 crore on construction, while another Rs 10,000 crore could be needed to fill the reserve with crude oil at current prices.

This would mark a major shift in India’s SPR strategy, as it will be the first time a state-owned oil company has been asked to develop such a reserve. Existing strategic oil storage facilities are owned and managed by Indian Strategic Petroleum Reserves Ltd (ISPRL), a government-backed entity.

India currently operates three strategic petroleum reserve facilities—Visakhapatnam (1.33 MMT), Mangaluru (1.5 MMT), and Padur (2.5 MMT), with combined storage capacity of 5.33 MMT.

Despite being one of the world’s largest crude consumers with demand of around 5 million barrels per day, India’s emergency stockpile remains significantly smaller compared with major economies. As per the US Energy Information Administration data cited in the report, India held about 21 million barrels of strategic crude stocks at the end of 2025, compared with 1,397 million barrels in China, 413 million barrels in the US, and 263 million barrels in Japan.

India has also been changing the way it manages strategic reserves. In 2021, the government allowed partial commercial use of SPR capacity, permitting storage leasing and crude trading activities to improve financial viability.

The second phase of India’s SPR expansion includes additional facilities at Chandikhol in Odisha (4 MMT) and Padur in Karnataka (2.5 MMT) under a public-private partnership model.

Large crude reserves are considered crucial for protecting economies against sudden supply disruptions, price spikes and currency volatility during geopolitical crises. The latest push signals India’s efforts to build a stronger buffer against future oil market shocks.