What are Strategic Petroleum Reserves (SPR)?

Why in the News?

India is planning to establish six new Strategic Petroleum Reserve (SPR) sites to boost energy security amid rising global oil risks.

About Strategic Petroleum Reserves (SPR):

• Overview: SPRs are emergency stockpiles of crude oil maintained by the government to manage supply disruptions caused by events like wars, embargoes, or price shocks.
• Purpose: To ensure national energy security and reduce vulnerability to external supply shocks.
• Historical Context: India realised the need for SPRs after the 1990 Gulf War, which caused supply cuts and spiking oil prices and ultimately the Balance of Payment (BoP) Crisis.
• Foundation: The SPR project began in the early 2000s based on advice from the Planning Commission’s Integrated Energy Policy.
• Governing Body: In 2004, the government set up Indian Strategic Petroleum Reserves Limited (ISPRL) as a Special Purpose Vehicle under the Oil Industry Development Board (OIDB).

• India’s three-pronged oil security framework:

1. 1. Commercial oil stocks by public and private oil marketing companies (OMCs).
   2. Strategic reserves by ISPRL for emergencies.
   3. Equity oil assets abroad through companies like ONGC Videsh Ltd. (OVL).

• Storage: Unlike commercial stocks, SPRs are stored in underground rock caverns, which are safer, more secure, and suited for long-term preservation.

Current SPR Infrastructure:

• SPR Locations: India has three active SPR sites:
  • Visakhapatnam (Andhra Pradesh)
  • Mangaluru (Karnataka)
  • Padur (Karnataka)
• Total Capacity: The combined SPR capacity is 5.33 MMT or roughly 39 million barrels.
• Coverage Duration: This reserve can meet about 9.5 days of India’s daily oil requirement (≈5.5 million barrels/day).
• Distinction from OMC Stocks: These strategic stocks are separate from commercial stocks held by companies like IOCL, HPCL, and BPCL.

Planned Expansion of SPRs in India:

• Goal: India aims to double SPR capacity due to rising geopolitical risks and import dependence.
• New Facilities Planned:
  • Chandikhol (Odisha) – 4 MMT (in two phases)
  • Padur Phase II (Karnataka) – 2.5 MMT
• 6 new SPR locations are being planned at various sites, including Mangalore SEZ (Karnataka) and salt caverns in Bikaner (Rajasthan).
• Future Capacity: After expansion, India’s total SPR stock will be 11.83 MMT, covering around 22 days of national demand.
• Strategic Vision: The long-term objective is to build up 90 days of oil reserves, in line with International Energy Agency (IEA) guidelines.