India is moving to expand its strategic petroleum reserves (SPRs) to address growing energy security concerns, with two new facilities under development in Odisha and Karnataka. According to The Hindu BusinessLine, these Phase-2 projects will provide a combined storage capacity of 6.5 million tonnes, split between 4 million tonnes at Chandikhol in Odisha and 2.5 million tonnes at Padur in Karnataka. The expansion aims to double domestic storage capacity in response to recent geopolitical tensions in West Asia.
The Chandikhol project, which has faced delays for nearly eight years, is reportedly progressing with the finalisation of commercial terms with Abu Dhabi National Oil Company (ADNOC). Approximately 400 acres of land have been allocated for this facility. In parallel, state-run ONGC is developing a separate 1.75 million tonne SPR at Mangalore. Additional feasibility studies are underway for new storage locations in Bina, Madhya Pradesh, and Bikaner, Rajasthan, which are intended to handle crude oil, LNG, and LPG.
Manas Majumdar, a partner at PwC India, noted that the Phase-2 expansion is being executed in a public-private partnership model with a capital expenditure of around ₹15,000 crore. This structure involves Megha Engineering, ADNOC, and the central government, which is providing a Voluntary Gap Funding of close to 60 per cent. Majumdar stated that despite this support, the expansion requires acceleration due to increased geopolitical turmoil.
The financial urgency is underscored by a significant rise in India’s crude import costs. The annual import bill was approximately $150 billion last year, while the crude basket price has increased from around $90 per barrel to over $110. This represents a more than 20 per cent increase, potentially adding $20 to $30 billion to the import bill depending on actual import volumes. Majumdar argued that having adequate crude storage would have allowed India to procure fuel at lower prices when reserves were filled, rather than buying at current elevated market rates.
To further enhance security, India has also pursued international storage options. The country signed a memorandum of understanding with the UAE in May 2026 for stockpiling crude oil in foreign locations and is in talks with Japan to deepen cooperation in strategic fuel reserves, according to sources cited by The Hindu BusinessLine. Majumdar suggested that resolving land acquisition issues and exploring salt caverns in central and western India could further expedite the development of these critical energy assets.