ONGC Green-Lights Move To Increase Strategic Oil Reserves In India

Oil and Natural Gas Corporation (ONGC) has sanctioned plans for increasing strategic crude oil reserves of the country through the addition of an extra 1.75 million tonnes of oil reserves in Mangaluru, Karnataka. The decision comes after disruptions linked to the recent Iran conflict highlighted the country’s dependence on imported energy supplies and the importance of maintaining emergency reserves.

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The approval was announced through a regulatory filing, in which ONGC described the project as being of “national importance.” While the company confirmed the additional storage capacity, it did not disclose the estimated project cost or implementation timeline.

Strategic Storage Capacity Set to Increase

The new facility will become part of the country’s strategic petroleum reserve network managed by Indian Strategic Petroleum Reserves Ltd. (ISPRL), the government-owned company responsible for maintaining emergency crude oil stockpiles.

India currently has underground strategic storage caverns with a combined capacity of 5.33 million tonnes across three locations on the east and west coasts. Work has already begun on two other sites that would bring an extra 6.5 million tonnes of storage capacity.

With the completion of Mangaluru, there would be yet another boost to India’s emergency reserve capacity, helping in coping up with any shortages that may occur due to geopolitical events.

Recent Event Exposed Vulnerability in Supply

This expansion was necessitated because of problems that occurred recently with global crude transport because of the Iran conflict, which affected transportation through the Strait of Hormuz. India sources a considerable proportion of its oil from the Persian Gulf nations, thus making events in that region very important for India.

The temporary problem forced some importers to look for new ways of sourcing their supplies. Although crude oil price movements have moderated since then, policymakers continue to focus on building additional storage capacity to reduce future supply risks.

The latest decision also marks the first instance of a government-owned upstream energy company committing its own funds toward expanding India’s strategic petroleum reserves. Earlier storage projects were primarily undertaken by government agencies, refiners and public sector oil companies for commercial purposes.

Government’s Long-Term Energy Security Plan

According to ONGC, the project will include associated infrastructure at the Mangaluru site in line with directions issued by the Ministry of Petroleum and Natural Gas.

The government has been working to build reserves of crude oil, liquefied natural gas and petroleum products that could meet as much as one month’s domestic demand during emergencies. The strategy also includes encouraging public-private partnerships and asking state-owned energy companies to expand both commercial and strategic storage facilities.

Mangaluru already plays an important role in India’s energy infrastructure. Mangalore Refinery and Petrochemicals Ltd. (MRPL), an ONGC subsidiary, operates a refinery with a capacity of 300,000 barrels per day in the state. The proposed caverns could also support storage requirements linked to MRPL’s operations.

Existing strategic storage facilities at Mangaluru have previously been leased by international companies, including Abu Dhabi National Oil Company (ADNOC). The latest expansion further strengthens India’s long-term preparedness against supply disruptions while supporting greater flexibility in managing crude oil price volatility and import security.