The Indian government has made the decision to lease out space in subterranean rock caverns, which are seen to be the safest way to store hydrocarbons, to foreign and local companies in order to store oil that it had previously intended to fill as part of its strategic petroleum reserve.

The Indian government had planned to buy 50 billion rupees ($601.78 million) worth of crude oil for caverns in the southern cities of Mangalore and Visakhapatnam as part of the Union Budget 2023–24. However, the finance ministry stated in January of this year that India has postponed the plan to fill portions of its strategic petroleum reserve due to emerging trends in the global oil markets.

What location are these oil reserves?

Three strategic subterranean storage facilities have been constructed in southern India: Visakhapatnam in Andhra Pradesh; Mangalore; and Padur in Karnataka. These facilities can hold 5.33 million tonnes of oil, which can be utilized in the event of a war or disruption in the supply chain. India Strategic Petroleum Reserve Ltd. constructed them.

Here, someone is keeping oil?

The 1.5 million tonnes facility in Mangalore and the 2.5 million tonnes storage capacity in Padur have already been rented by the National Oil Company (Adnoc), which is headquartered in Abu Dhabi, United Arab Emirates.

Indian Strategic Petroleum Reserves Limited, or ISPRL, has filled the remaining 1.25 million tonnes at Padur, while 0.75 million tonnes of empty storage space at Mangalore will be leased out, CEO and Managing Director LR Jain of ISPRL informed the media on the fringes of India Energy Week.

Of the 1.33 million tonnes of storage space at Visakhapatnam, 0.33 million tonnes were reserved for the Hindustan Petroleum Corporation Ltd (HPCL). According to Jain, HPCL has rented an additional 0.3 million tonnes of the remaining storage, and the remaining space would be leased out.

The first country to use the oil will be India

Jain went on to say that although businesses like Adnoc can store oil in reserves, India will have first dibs on the oil. Thus, he continued, "India can call upon the reserves in any emergency."

Adnoc is among the several oil firms that use this kind of storage to retain oil before selling it to customers. More than 80% of the oil needed by India, the third-largest oil consumer and importer in the world, is imported.