Strategic Petroleum Reserves (SPRs)

Context: The Ministry of Petroleum and Natural Gas informed the Rajya Sabha that India’s Strategic Petroleum Reserves (SPRs) are currently at only 64% capacity.

About Strategic Petroleum Reserves (SPRs):

What it is?

• Strategic Petroleum Reserves are massive stockpiles of crude oil stored in underground rock caverns. They serve as a specialized insurance policy to protect the nation against unplanned supply disruptions caused by geopolitical wars, natural disasters, or global price shocks.

Established In:

• The concept was mooted after the 1973 oil crisis.
• Indian Strategic Petroleum Reserve Limited (ISPRL), the Special Purpose Vehicle (SPV) managing them, was created in 2004 under the Oil Industry Development Board (OIDB).

Initiative is Part of:

• India’s broader Energy Security Strategy and its commitment as an Associate Member of the International Energy Agency (IEA), which recommends maintaining a 90-day reserve of net oil imports.

Located In (Phase-I):

1. Visakhapatnam, Andhra Pradesh.
2. Mangaluru, Karnataka.
3. Padur, Karnataka.

Phase-II expansion is planned for Chandikhol, Odisha, and further expansion in Padur.

Aim:

• To ensure energy sovereignty by providing a short-term buffer (currently covering approximately 9.5 days of India’s requirement) during emergencies, effectively shielding the domestic economy from volatile global oil markets.

Key Features:

• Underground Storage: Oil is stored in unlined underground rock caverns, which is safer and more cost-effective than above-ground tanks.
• Hydrostatic Containment: These caverns use the pressure of surrounding groundwater to keep the oil trapped inside, preventing leaks.
• Strategic-cum-Commercial Model: The government allows foreign National Oil Companies (like ADNOC of UAE) to lease space, reducing the government’s storage costs while ensuring the oil remains in India for emergencies.
• Dynamic Stocking: ISPRL manages the inventory by buying crude when international prices are low (downcycle) to save on the exchequer’s bill.
• Refiner Integration: The SPRs are strategically located near the coast and existing refineries to ensure quick mobilization of crude during a crisis.

Significance:

• Protects India—the world’s third-largest oil consumer—which imports over 88% of its crude requirement.
• Prevents sudden spikes in petrol and diesel prices at the pump, which can trigger inflation across the entire supply chain.