Strategic Breakthrough: ONGC Approves Major Expansion of Crude Reserves to Secure India's Energy Resilience

Strategic Breakthrough: ONGC Approves Major Expansion of Crude Reserves to Secure India's Energy Resilience​

Oil and Natural Gas Corp. (ONGC) has greenlit a critical expansion project aimed at bolstering India’s energy security by significantly increasing strategic crude reserves. This move comes as part of a nationwide push for greater energy resilience following the severe global shocks caused by the Iran war. The board approval marks a proactive step by the nation's largest oil and gas producer to secure vital energy stocks domestically.

Securing National Energy Resilience Against Global Crises​

The new project is deemed of "national importance" by ONGC, as stated in its filing. This strategic focus addresses the extreme vulnerability faced by India, which relies heavily on crude oil and natural gas imported from the Persian Gulf region. The near total closure of the Strait of Hormuz during the Iran war highlighted this weakness, forcing importers to seek urgent alternatives.

The government has established a clear objective: ensuring that reserves of crude, liquefied natural gas, and petroleum gas are substantial enough to meet approximately one month of domestic demand. Authorities are leveraging public private partnerships (PPPs) while simultaneously instructing state-run producers and refiners to expand their commercial storage capacities to support the national goal.

Expanding India's Strategic Stockpile Capacity​

The approved initiative involves adding 1.75 million tons of capacity to the national crude reserves at a facility in Mangalore, Karnataka. This expansion will enhance the holdings managed by Indian Strategic Petroleum Reserves Ltd., the state-owned entity responsible for overseeing these strategic stockpiles.

Currently, Indian Strategic maintains underground caverns across three sites on the east and west coasts, totaling 5.33 million tons. To further scale up storage capabilities, two additional sites are under construction and are set to contribute a total of 6.5 million tons of space.

Leveraging Domestic Infrastructure in Mangalore​

This initiative represents a pioneering effort, as ONGC is the first state-owned company to invest its own funds into building strategic stockpiles. Previously, state-run refiners and oil producers focused only on commercial storage capacities. The new caverns in Mangalore can be utilized in conjunction with the Mangalore Refinery and Petrochemicals Ltd. (MRPL).

As a domestic operation, MRPL runs a 300,000-barrel-a-day refinery located in Karnataka state. The importance of this site is further underscored by Abu Dhabi National Oil Co., the largest oil company in the United Arab Emirates, which has already leased space within the existing caverns there.