The government is seeking private investment to develop its largest strategic petroleum reserve (SPR) at Chandikhol in Odisha. The proposed facility will have a crude oil storage capacity of 4 million tons (40 lakh tons) and an estimated project cost of ₹8,571 crore. Once completed, the facility will increase India’s existing strategic petroleum storage capacity by approximately 80%, strengthening the country’s ability to manage crude oil supply disruptions and energy security risks.
Government Offers ₹5,142 Crore Grant to Attract Investors
According to the tender documents, the government plans to provide financial support of up to ₹5,142 crore for the project. It will award the contract to the bidder seeking the lowest government grant. The government is also planning to lease nearly half of the existing strategic petroleum storage capacity at Visakhapatnam, equivalent to 5,24,000 tons, for an initial period of three years. The agreement will include an option to extend the lease by another four years. Indian Strategic Petroleum Reserve Limited (ISPRL), which manages India’s strategic crude oil reserves, has issued separate tenders for leasing storage capacity at the proposed Odisha facility and the existing Visakhapatnam facility. The deadline for submitting bids for the Chandikhol project is 26 February 2027, while interested parties must submit bids for the Visakhapatnam storage lease by 1 December 2026.
Global Oil Producers Explore Storage Opportunities in India
The government’s plans come amid growing interest among West Asian oil producers in securing crude oil storage facilities outside their region to manage geopolitical risks and potential disruptions to energy supplies through the Strait of Hormuz. For instance, Saudi Arabia recently announced plans to begin storing crude oil in underground rock caverns in Singapore from next year. The country already maintains crude oil storage facilities in Japan and South Korea. Similarly, the United Arab Emirates (UAE), which already stores some crude oil in India’s strategic reserves, announced plans in June to expand its oil storage arrangements in the country.
Strait of Hormuz Disruptions Highlight India’s Energy Security Risks
Disruptions in the Strait of Hormuz have exposed vulnerabilities in India’s crude oil supply chain, prompting the government to accelerate efforts to expand strategic petroleum reserves. The sudden closure of this critical shipping route disrupted nearly 40% of India’s crude oil supplies. Consequently, domestic refineries had to source alternative crude oil cargoes from international markets, often at higher prices. As reported by speaks.co.in, to strengthen emergency storage capacity, the government has also directed Oil and Natural Gas Corporation (ONGC) to develop a strategic crude oil storage facility with a capacity of 1.75 million tons in Mangaluru. ONGC approved the project in July.
